MEMORANDUM OPINION AND ORDER
Pending before the court is the plaintiffs Motion to Remand [Docket 6]. For the reasons discussed below, this Motion is DENIED.
I. Background
On May 12, 2009, the plaintiff, Joel Scar-alto, was driving down U.S. Route 35 near Henderson, West Virginia. As Mr. Scaralto made a left-hand turn, he was rear-ended by a truck driven by Walter Ferrell. At that time, Mr. Ferrell was employed by Arnett Holdings,, Inc., d/b/a TMC Transportation.
Mr. Scaralto filed his Complaint in the Circuit Court of Kanawha County on February 18, 2011. He alleged that due to Mr. Ferrell’s and TMC Transportation’s negligence, he:
was severely injured in and about his neck, shoulder and arms, has incurred medical expenses and will incur additional medical expenses in the future; has endured pain and suffering, both in the past and in the future; has sustained an impairment of the capacity to enjoy life, both past and future; and the plaintiff has in the past suffered annoyance, aggravation, and mental anguish and will continue to do so in the future.
(Compl. ¶ 7 [Docket 1-1].) In the Complaint, Mr. Scaralto also alleges that he is entitled to punitive damages. (Id. at ¶ 9.)
Mr. Ferrell filed a Notice of Removal on August 8, 2011, and attached TMC Transportation’s Consent to Removal.
II. Standard of Review
An action may be removed from state court to federal court if it is one over which the district court would have original jurisdiction. 28 U.S.C. § 1441(b). Because the federal courts are courts of limited jurisdiction, the party seeking removal bears the burden of demonstrating that it is proper. Ellenburg v. Spartan Motors Chassis, Inc.,
III. Discussion
a. Citizenship
There is no dispute that the parties are diverse. The plaintiff, Mr. Scaralto, is a West Virginia resident. TMC Transpórtation is an Iowa resident, and Walter Ferrell is a resident of Virginia.
b. Amount in Controversy
i. Discussion
In the removal context, determination of whether the amount in controversy exceeds the jurisdictional minimum has typically proceeded in two different ways, depending on whether there is an ad damnum clause in the complaint that contains an amount over the jurisdictional minimum.
This second approach stands in stark contrast to the bright-line test applied when there is an ad damnum clause with an amount over the jurisdictional mini
In 2008, the West Virginia legislature enacted a statute that prohibits a plaintiff in a personal injury or wrongful death action from including a “specific dollar amount or figure relating to damages” in the complaint.
Although the task of examining a number of factors to determine whether the defendant has met its burden of proof is unavoidable in some situations, I do not think it makes sense to do so when the plaintiff has made a settlement demand that exceeds $75,000. Indeed, I have determined that such a settlement demand should have the same legal status as an ad damnum clause over the jurisdictional minimum, ie., it should be conclusive of the amount in controversy unless it is a legal certainty that the plaintiff cannot recover over $75,000. I will explain.
In doing so, I will examine the current judicial valuation approach for amount in controversy disputes used in this district. Then, I will explicate the firmly established bright-line rule that applies when the ad damnum clause contains an amount above the jurisdictional minimum. Next, I will make my case that plaintiffs’ settlement demands over $75,000 should be treated similarly. Finally, I will highlight the practical benefits of this approach.
In the Southern District of West Virginia, we apply a preponderance of the evidence standard when the state court complaint does not include an ad damnum clause claiming an amount over the jurisdictional minimum.
the type and extent of the plaintiffs injuries and possible damages recoverable therefore, including punitive damages if appropriate. The possible damages recoverable may be shown by the amounts awarded in other similar cases. Another factor for the court to consider would be the expenses or losses incurred by the plaintiff up to the date the notice of removal was filed. The defendant may also present evidence of any settlement demands made by the plaintiff pri- or to removal although the weight to be given such demands is a matter of dispute among courts.
Id. (internal citations omitted). In Sayre v. Potts, I stated that “the amount in controversy is determined by considering the judgment that would be entered if the plaintiff prevailed on the merits of his case as it stands at the time of removal.”
Under prior cases in the federal courts of this state, a settlement demand has been considered just one piece of evidence regarding the amount in controversy. See Williams v. Hodgson, No. 5:11CV80,
Similarly, courts in other districts using a multi-factor approach have determined that the weight to be given to a settlement demand depends on the circumstances. See Diaz v. Big Lots Stores, Inc., No. 5:10-cv-319,
Our judicial valuation approach is time consuming and oftentimes futile. To determine likely recovery in advance of litigation, “[t]he court either would need to hold a mini-trial at the start of the litigation to determine probable damages, or the court would be left to make an impressionistic guess about the plaintiffs likely damages.”
In contrast to the judicial valuation approach, courts consistently hold that when the amount stated in the ad damnum clause is more than $75,000, the defendant has met its burden of proving the amount in controversy unless it is a legal certainty that the plaintiff cannot recover over the jurisdictional minimum. 14C Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 3725.1 (4th ed. 2009). In discussing the amount in controversy where there was an ad damnum clause, the U.S. Supreme Court, in Smithers v. Smith, stated:
Ordinarily the plaintiffs claim with respect to the value of the property taken from him or the amount of damages incurred by him through the defendants’ wrongful act measures, for jurisdictional purposes, the value of the amount in controversy ... unless, upon inspection, it appears that, as a matter of law, it is not possible for the plaintiff to recover the jurisdictional amount.
The rule that the plaintiffs allegations of value govern in determining the jurisdiction, except where, upon the face of his own pleadings, it is not legally possible for him to recover the jurisdictional amount, controls even where the declaration shows that a perfect defense might be interposed to a sufficient amount of the claim to reduce it below the jurisdictional amount.
Id. (emphasis added). In Smithers, the plaintiffs complaint, filed in federal court, sought monetary damages in excess of the jurisdictional amount. The defendants argued that the amount was fraudulently alleged to confer federal jurisdiction. Id. at 635,
In St. Paul Mercury Indemnity Co. v. Red Cab Co., the respondent filed a complaint in state court, demanding an amount in excess of the federal jurisdictional minimum, and the case was removed to federal court.
Echoing its decision in Smithers, the Court explained that:
The rule governing dismissal for want of jurisdiction in cases brought in the federal court is that, unless the law gives a different rule, the sum claimed by the plaintiff controls if the claim is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal.
Id. at 288-89,
These cases demonstrate that the amount in controversy is what the plaintiff claims to be entitled to or demands.
Having examined Supreme Court amount in controversy cases where there is an ad damnum clause in the complaint and Judge Easterbrook’s opinion in Brill v. Countrywide Home Loans, Inc.,
The district judge thought that a removing litigant must produce evidence that a favorable judgment will award Plaintiff more than the jurisdictional minimum----Yet suits are removed on the pleadings, long before “evidence” or “proof’ have been adduced. The question is not what damages the plaintiff will recover, but what amount is “in controversy” between the parties. That the plaintiff may fail in its proof, and the judgment be less than the threshold (indeed, a good chance that the plaintiff will fail and the judgment will be zero) does not prevent removal. Once the proponent of jurisdiction has set out the amount in controversy, only a “legal certainty” that the judgment will be less forecloses federal jurisdiction. This standard applies to removed cases no less than to those filed initially in federal court.
When there is no ad damnum, clause or settlement demand, the court has no information about what the plaintiff claims to be entitled to. See Brill,
Because the amount in controversy is what the plaintiff claims or demands, rather than an estimation of the plaintiffs likely recovery if he prevails, it does not matter that the plaintiffs settlement demand may not accurately reflect the “value” of the case. Likewise, in my experience as a lawyer and a judge for more than forty years, the amount claimed in an ad damnum clause is rarely a product of careful calculation of the amount the plaintiff expects to recover at trial, but rather a hopeful and optimistic demand high enough to get the defendant’s attention. Nevertheless, it is agreed that when the amount stated in the ad damnum clause is over $75,000, it generally reflects the amount in controversy. The same should be true of a settlement demand.
As a judge looking at this, I keep firmly in mind that the plaintiff is the master of his complaint and therefore the amount in controversy is the amount the plaintiff claims to be entitled to unless that amount is legally impossible. I am also mindful that the plaintiff is the master of any settlement demand made on the defendant. Because of this insight and the reasons below, I HOLD that a demand in excess of the jurisdictional minimum should be treated as the amount in controversy, un
This approach enhances the predictability and efficiency of jurisdictional decisions. These attributes are particularly important now that fewer complaints contain an ad damnum clause as a result the West Virginia legislature’s adoption of West Virginia Code § 55-7-25. It puts the parties on notice that a settlement demand over $75,000 will generally be dispositive of the jurisdictional issue of the amount in controversy. It also relieves the court of the metaphysical task of putting a value on the ease. “Jurisdictional rules direct judicial traffic. They function to steer litigation to the proper forum with a minimum of preliminary fuss.” Hartley v. CSX Transp., Inc.,
ii. Application
In this case, Mr. Scaralto sent a settlement demand to the defendants for $150,000. The plaintiff cannot show that it is a legal certainty that he is unable to recover over $75,000. Accordingly, I FIND that the defendants have met their burden of proving the requisite amount in controversy and DENY the plaintiffs Motion to Remand [Docket 6].
The court DIRECTS the Clerk to send a copy of this Order to counsel of record and any unrepresented party. The court DIRECTS the Clerk to post a copy of this published opinion on the court’s website, www.wvsd.uscourts.gov.
Notes
. In the Motion to Remand, Mr. Scaralto argues that the suit should be remanded because Mr. Ferrell did not consent to removal. Even though the parties have been unable to locate Mr. Ferrell, removal is appropriate under West Virginia Code § 56-3-31. The stat-
. An ad damnum clause is defined as “A clause in a prayer for relief stating the amount of damages claimed.” Black’s Law Dictionary (9th ed. 2009).
. Other states have adopted similar statutes. See N.Y. C.P.L.R. § 3017(c) (McKinney 2010); 735 Ill. Comp. Stat. 5/2-604 (2003); Colo. R. Civ. P. 8(a).
. Other courts have applied different standards of proof for defendants in removal cases. See Gafford v. General Elec. Co.,
. This quote is taken from Chemerinsky's discussion of the legal certainty test when the plaintiff files its case in federal court. I believe, however, that the court is put in the same situation in the removal context.
. An article published in 2004 stated that, "The portion of federal civil cases resolved by trial fell from 11.5 percent in 1962 to 1.8 percent in 2002, continuing a long historic decline. More startling was the 60 percent decline in the absolute number of trials since the mid 1980s." Marc Galanter, The Vanishing Trial: An Examination of Trials and Related Matters in Federal and State Courts, 1 J. Empirical Legal Stud. 459, 459 (2004).
. There has been some confusion over whether "good faith” and "legal certainty” are two separate tests or whether the former is measured by the latter. The U.S. Supreme Court suggested that this language constitutes a single test: “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 stated in the complaint is not claimed ‘in good faith.’ In deciding this question of good faith we have said that it 'must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal.'” Horton v. Liberty Mut. Ins. Co.,
. The holding in Red Cab is limited to instances where the amount in the state court complaint's ad damnum clause is above the jurisdictional minimum. The U.S. Supreme Court has not spoken on the standard when the amount in the state court complaint’s ad damnum clause is below $75,000. In the Southern District of West Virginia, we have applied the preponderance of the evidence standard. McCoy v. Erie Ins. Co.,
. In contrast, “In a suit for injunctive relief, 'the amount in controversy is measured by the value of the object of the litigation.’" Macken v. Jensen,
. The following quote from the U.S. Supreme Court decision in Smithers v. Smith further calls into question our current judicial valuation approach:
We know of no case that holds that in [a situation where it is legally possible for the plaintiff to recover the full amount of the damages claimed, which are over the jurisdictional amount] the judge of the circuit court is authorized to interpose and try a sufficient part of the controversy between the parties to satisfy himself that the plaintiff ought to recover less than the jurisdictional amount, and to conclude, therefore, that the real controversy between the parties is concerning a subject of less than the jurisdictional value, and we think that, by sound principle, he is forbidden to do so.