Musgrove v. ACE American Insurance Company et al
ORDER granting 15 Motion to Remand to State Court. This action is remanded to the Circuit Court of Washington County. Signed by Chief Judge William H. Steele on 4/29/2013. (tgw)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
BURL V. MUSGROVE,
) CIVIL ACTION 13-0104-WS-C
KELLOGG BROWN AND ROOT, LLC, )
This matter is before the Court on the plaintiff’s motion to remand. (Doc.
15). The interested parties have filed briefs in support of their respective
positions, (Docs. 21, 22), and the motion is ripe for resolution. After careful
consideration of the foregoing and other relevant material in the file, the Court
concludes that the motion is due to be granted.
This case began as a straightforward action for recovery of worker’s
compensation benefits from defendant Kellogg Brown and Root, LLC (“KBR”).
(Doc. 15 at 2). Some eight months later, the plaintiff filed an amended complaint
adding as defendants Ace American Insurance Company (“Ace”); ESIS, Inc.
(“ESIS”); Chris Peters and Kevin Byrd, as well as various fictitious defendants.
(Doc. 1, Exhibit A). The amended complaint adds a claim for retaliatory
discharge against KBR and claims for outrage, conspiracy, fraud and abuse of
process against all defendants. (Id.). The general drift of the tort claims is that the
defendants falsely told the plaintiff his injury was not compensable under the
workers’ compensation statutes and that they denied him medical treatment and
disability benefits due him under those statutes, in order to defraud him of such
treatment and benefits and/or to coerce him to settle his workers’ compensation
claim for less than its value. The complaint demands “compensatory and punitive
damages as a jury deems reasonable.” (Id. at 8, 10-12).
Ace and ESIS removed on the basis of diversity. The plaintiff timely
moved to remand, ultimately restricting his motion to two grounds: (1) the nonremoval provision of Section 1445(c); and (2) and the defendants’ failure to
establish that the amount in controversy exceeds the jurisdictional threshold.
(Doc. 22 at 6).1
As the parties agree, “[a] removing defendant bears the burden of proving
proper federal jurisdiction.” Adventure Outdoors, Inc. v. Blomberg, 552 F.3d
1290, 1294 (11th Cir. 2008) (internal quotes omitted).
I. Section 1445(c).
“A civil action in any State court arising under the workmen’s
compensation laws of such State may not be removed to any district court of the
United States.” 28 U.S.C. § 1445(c). The parties agree that the worker’s
compensation count and the retaliatory discharge count – causes of action created
by Alabama’s workers’ compensation statute – fall within this proscription. See
The motion to remand asserts in a single, introductory sentence that “[r]emoval
is improper because all of the Defendants have not consented to the removal ….” (Doc.
15 at 2). Because the plaintiff presented no argument in support of this ground, and
because he later explicitly limited his motion to other grounds, his unanimity argument is
waived. See, e.g., Transamerica Leasing, Inc. v. Institute of London Underwriters, 430
F.3d 1326, 1331 n.4 (11th Cir. 2005) (“[A] passing reference to an issue in a brief [is]
insufficient to properly raise that issue.”).
In a single, one-sentence footnote, the motion to remand argues without
explanation that the defendants have failed to show the existence of complete diversity.
(Doc. 15 at 13 n.1). As this raises a jurisdictional objection, it presumably cannot be
waived by the plaintiff’s failure to support it. However, the defendants have in fact
demonstrated the existence of complete diversity. (Doc. 1 at 3-4; Doc. 11 at 2; Doc. 19).
Reed v. Heil Co., 206 F.3d 1055, 1060 (11th Cir. 2000) (retaliatory discharge claim
under Ala. Code § 25-5-11.1 arises under Alabama’s workers’ compensation laws
for purposes of Section 1445(c)).
The plaintiff, however, goes further, insisting without elaboration that each
of his tort claims “arises from … violations of the Workers’ Compensation Acts of
Alabama.” (Doc. 15 at 4). Because the plaintiff argues that his claims arise from
violations of the workers’ compensation laws, the Court concludes that he makes
no argument these claims arise under those laws, as Section 1445(c) requires.
Were he to make such an argument, it would fail. E.g., Patin v. Allied Signal, Inc.,
77 F.3d 782, 790 (5th Cir. 1996) (“We hold, however, that the breach of the duty of
good faith and fair dealing by a carrier of workers’ compensation insurance is an
independent tort created by – and thus ‘arising under’ – the common law ….”);
Raye v. Employer’s Insurance, 345 F. Supp. 2d 1313, 1316 (S.D. Ala. 2004)
(“[S]tate causes of action that are creatures of the common law do not ‘arise
under’ the worker’s compensation laws.”).2
The plaintiff’s primary argument is that, as long as a lawsuit contains at
least one claim captured by Section 1445(c), that statute precludes removal of the
action and requires remand of the entire action. (Doc. 15 at 6-7). He appears to
believe that Reed supports his position, but it does not. On the contrary, and as
this Court has recently explained after careful discussion, “Reed holds that, when
removal is properly accomplished under Section 1441(a), the federal court is to
remand the worker’s compensation claim and retain the properly removed claims.”
Lamar v. Home Depot, ___ F. Supp. 2d ___, 2012 WL 6026272 at *3 (S.D. Ala.
2012). The plaintiff protests that the language of Section 1445(c) unambiguously
precludes the result reached in Reed, (Doc. 22 at 2-3), but he explains neither how
The plaintiff asserts similarly that each of his tort claims “directly relates to
violations” of the workers’ compensation laws. (Doc. 15 at 4). Section 1445(c) is not
triggered by such a loose connection. Patin, 77 F.3d at 789.
it does so nor how this Court could refuse to apply a binding Eleventh Circuit
Finally, the plaintiff suggests that remand of the entire action should be
ordered in the interests of efficiency and comity. (Doc. 15 at 7). As noted in
Lamar, however, Eleventh Circuit precedent makes plain that “[w]hen … a claim
has been properly removed and is not subject to remand under the governing
statutes, it cannot be remanded on the grounds that judicial economy will be
served thereby.” 2012 WL 6026272 at *5.
II. Amount in Controversy.
A. Procedural Vehicle.
Removal often will be based on the original complaint. 28 U.S.C. §
Except as provided in subsection (c), if the case stated
by the initial pleading is not removable, a notice of removal
may be filed within 30 days after receipt by the defendant,
through service or otherwise, of a copy of an amended
pleading, motion, order or other paper from which it may
first be ascertained that the case is one which is or has
Id. § 1446(b)(3). The initial pleading in this case consisted only of a nonremovable workers’ compensation claim. The parties assume that removal thus
must be accomplished, if at all, under subsection (b)(3), and the Court indulges
B. Evidence Considered.
Until a recent statutory re-organization, Section 1446(b)(3) was known as
the “second paragraph” of Section 1446(b). Pretka v. Kolter City Plaza II, Inc.,
608 F.3d 744, 757 (11th Cir. 2010). “Although the second paragraph of § 1446(b)
offers an additional avenue for removal, that road is not an easy one for defendants
to travel.” Id. at 760. In particular, in Lowery v. Alabama Power Co., 483 F.3d
1184 (11th Cir. 2007), “[w]e held that [the defendant’s] evidence [regarding the
amount in controversy] could not be considered because it was not a document
received from the plaintiffs.” Pretka, 608 F.3d at 756.3 Lowery’s “‘receipt from
the plaintiff’ rule is based on the second paragraph of § 1446(b),” id. at 760, and in
second paragraph cases, this portion of Lowery apparently controls.4 Since the
defendants articulate no argument to the contrary, the Court will assume for
present purposes that this is the case.
The plaintiff, invoking Lowery, insists that “the factual information
establishing the jurisdictional amount must come from” him. (Doc. 15 at 8-9).
The defendants’ primary sources are the following: (1) the original complaint; (2)
the amended complaint; (3) the plaintiff’s deposition; and (4) medical bills. (Doc.
1 at 6-8). Complaints necessarily come from the plaintiff, a plaintiff’s deposition
transcript constitutes an “other paper” within Section 1446(b)(3),5 and the medical
bills were “received from plaintiff’s attorney.” (Id. at 7). The plaintiff fails to
The Pretka Court cited the following passage in Lowery for this proposition:
“The additional ‘evidence’ contained in the supplement likewise fails to support the
defendants’ contention that the district court had jurisdiction over this action [because]
this evidence … was not received from the plaintiffs, but rather was gathered from
outside sources. As such, the evidence is not of the sort contemplated by § 1446(b).”
483 F.3d at 1220-21.
See Pretka, 608 F.3d at 756 (describing this portion of Lowery as a holding); see
also id. at 756, 760, 761, 762, 763, 767, 770 (repeatedly referring to “receipt from the
plaintiff” as the “rule”).
The Court has previously so held, Sudduth v. Equitable Life Assurance Society,
2007 WL 2460758 at *1-3 (S.D. Ala. 2007), as has every appellate court known to have
addressed the issue. See Carvalho v. Equifax Information Services, LLC, 629 F.3d 876,
886-87 (9th Cir. 2010); Peters v. Lincoln Electric Co., 285 F.3d 456, 465-66 (6th Cir.
2002); S.W.S. Erectors, Inc. v. Infax, Inc., 72 F.3d 489, 494 (5th Cir. 1996); see also
Lowery, 483 F.3d at 1212 n.62 (noting that the Fifth Circuit has so held); 28 U.S.C. §
1446(c)(3)(A) (when the initial pleading is not removable solely because of the amount in
controversy, state court responses to discovery “shall be treated as an ‘other paper’ under
subsection (b)(3)”). At any rate, the only information the defendants glean from the
plaintiff’s deposition – the dates of the plaintiff’s injury and return to work – is also
included in the amended complaint. (Doc. 1, Exhibit A at 3, 5).
explain how any of this information could be considered not to have come from
him, and the Court will not devise arguments on his behalf.6
The defendants also rely on a statutory formula for calculating unpaid
worker’s compensation benefits. (Doc. 1 at 7-8). This formula did not come from
the plaintiff, but “[a] defendant would be free to introduce evidence regarding
damages arising from a source such as a contract provision whether or not the
defendant received the contract from the plaintiff. In such situations, the
underlying substantive law provides a rule that allows the court to determine the
amount of damages.” Lowery, 483 F.3d at 1214 n.66. A statutory formula for
damages plainly falls within this exception to the “receipt from the plaintiff” rule.
Finally, the defendants rely on a few Alabama appellate cases upholding
awards in outrage cases above or near the $75,000 jurisdictional threshold. (Doc.
1 at 13; Doc. 21 at 6-7). Here, the plaintiff has the upper hand; the Lowery Court
expressly rejected the use of results in other cases as evidence of the amount in
controversy in second paragraph removals, precisely because such information
does not come from the plaintiff. 483 F.3d at 1189, 1220-21. Accordingly, the
Court will not consider those cases.7
C. Evidentiary Standard.
“We have held that, in the removal context where damages are unspecified,
the removing party bears the burden of establishing the jurisdictional amount by a
preponderance of the evidence.” Lowery, 483 F.3d at 1208. The Lowery Court
challenged the derivation of this rule but acknowledged that “[w]e are bound to
Because the “receipt from the plaintiff” rule is procedural, not jurisdictional,
Pretka, 608 F.3d at 756, any arguments concerning it are waivable.
The defendants believe that Bell v. Preferred Life Assurance Society, 320 U.S.
238 (1943), trumps Lowery and permits the Court to consider the results of other cases.
(Doc. 1 at 8-10). But Bell involved an original action in which the plaintiff explicitly
demanded more than the jurisdictional threshold, and the question was whether, to a legal
certainty, he could not recover that threshold amount. Id. at 240. Bell says nothing about
evaluating the amount in controversy when, as here, there is an indeterminate demand.
adhere to circuit precedent.” Id. at 1210. Nevertheless, the Lowery Court insisted
that removal is permissible only if the evidence “unambiguously establish[es]
federal jurisdiction.” Id. at 1213; see also id. at 1213 n.63, 1218 (removal is
proper only if the documents presented by the defendant contain “an unambiguous
statement that clearly establishes federal jurisdiction”).
This Court has questioned the Lowery Court’s authority to require
unambiguous proof of the amount in controversy.8 More recently, Congress has
expressly imposed a “preponderance of the evidence” standard for determining the
amount in controversy. 28 U.S.C. § 1446(c)(2)(B). This standard applies to
second paragraph removals. See id. § 1446(c)(2) (“If removal of a civil action is
sought on the basis of the jurisdiction conferred by section 1332(a),” and other
requirements are met, the preponderance standard applies); see also H.R. Rep.
112-10, 2011 U.S.C.C.A.N. 576, 2011 WL 484052 at *16 (2011) (if removal is
accomplished under Section 1446(b)(3) – the former “second paragraph”
provision – “[t]he district court must still find by a preponderance of the evidence
that the jurisdictional threshold has been met”).9 As the plaintiff has not requested
SUA Insurance Co. v. Classic Home Builders, LLC, 751 F. Supp. 2d 1245, 1250
& n.2 (S.D. Ala. 2010) (noting that the prior-panel-precedent rule would appear to
preclude imposition of a standard more rigid than preponderance of the evidence, even in
the second paragraph context).
The preponderance-of-the-evidence standard is jurisdictional. Pretka, 608 F.3d
at 751-52. At least one Court has attempted to harmonize Lowery by construing its
unambiguously-establish standard as a separate, procedural requirement grounded in
Section 1446 (which is styled, “Procedure for removal of civil actions”), and specifically
Section 1446(b)(3). See Exum v. State Farm Fire & Casualty Co., 821 F. Supp. 2d 1285,
1292-93 (M.D. Ala. 2011). Since the statutory preponderance-of-the-evidence standard
also resides in Section 1446 and applies to removals under Section 1446(b)(3), it
presumably trumps Lowery even if the unambiguously-establish standard is viewed as
the Court to apply Lowery’s higher standard,10 the Court utilizes the familiar
D. Proof of the Amount in Controversy.
A court may find the jurisdictional threshold satisfied based on “evidence
combined with reasonable deductions, reasonable inferences, or other reasonable
extrapolations.” Pretka, 608 F.3d at 754. Among the tools a court may employ
are “judicial experience and common sense.” Roe v. Michelin North America,
Inc., 613 F.3d 1058, 1064 (11th Cir. 2010). But, “[i]f that evidence [as assessed
per Pretka and Roe] is insufficient to establish that removal was proper or that
jurisdiction was present, neither the defendants nor the court may speculate in an
attempt to make up for the notice’s failings.” Lowery, 483 F.3d at 1214.
Each tort count of the amended complaint identifies the following elements
of the plaintiff’s damages: (1) emotional distress; (2) pain and suffering; (3) past
and future medical bills; (4) loss of income; (5) the inability of his wife to obtain
necessary medical treatment; and (6) punitive damages. (Doc. 1, Exhibit A at 811).
The defendants first attempt to assign hard values to the plaintiff’s demand
for medical expenses and lost income. As to the former, the defendants point to
medical bills received from plaintiff’s counsel, which they say total $18,610.57.
As to the latter, the defendants point to the allegation of the amended complaint
and the plaintiff’s deposition that he was out of work from April 10 to October 15;
the allegation of the original complaint that the plaintiff’s average weekly wage
was $960; and a statutory formula for converting this information into lost wages
for temporary total disability under the worker’s compensation regime, which they
calculate as $18,569.28. (Doc. 1 at 7-8).
On the contrary, the plaintiff has identified the proper standard as
preponderance of the evidence. (Doc. 15 at 7-8).
There is one big problem with the defendants’ position. While they assert
in brief that the plaintiff’s medical bills total a certain amount and that his average
weekly wage was a certain amount, they have presented no evidence to establish
these figures. The defendants state the medical bills are attached as an exhibit to
the notice of removal, (Doc. 1 at 7), but they are not. (Id., Exhibit B).11 And
while they attached the amended complaint to their notice of removal, they did not
attach the original complaint, on which they rely to establish the plaintiff’s
average weekly wage.12 Because the defendants have presented no evidence of the
plaintiff’s medical bills or lost income, they necessarily have failed to establish by
a preponderance of the evidence their contention that these items of damage place
over $37,000 in controversy.
The defendants next argue that the remaining elements of damage – future
medical bills, pain and suffering, emotional distress and punitive damages –
combine to place more than $38,000 in controversy. (Doc. 1 at 8-13; Doc. 21 at 58).13 The explicit and indispensable premise of the defendants’ argument is that
Exhibit B consists of a single paragraph of text indicating there are medical
records from three providers. Neither the records nor the bills are attached. Instead,
Exhibit B states that “[t]hese medical records are being retained by the undersigned
counsel due to HIPAA which restricts the dissemination of medical records. These
medical records will be filed under seal to this Court and to opposing counsel once this
case has been assigned to a particular Judge.” This has never occurred.
The Court pointed out to the defendants over a month ago that they had
neglected to submit these documents, (Doc. 11 at 2 n.1), yet they have never
supplemented their submission in support of removal.
The defendants in their principal brief did not attempt to assign value to the
wife’s inability to obtain medical treatment, which is probably appropriate given the lack
of indication that the plaintiff could legally recover for his wife’s losses. In their reply
brief, the defendants for the first time suggest that this element of claimed damage should
be considered, although it is unclear why they think so. (Doc. 21 at 5). As this Court has
often observed, and often enforced, arguments first raised in reply will not be considered
absent an excellent reason advanced by the movant for doing so. E.g., Gould v.
Transamerica Life Insurance Co., 2013 WL 68873 at *4 & n.10 (S.D. Ala. 2013)
(articulating the rule, demonstrating its ubiquity, and explaining the underlying rationale).
the plaintiff’s hard damages exceed $37,000, such that less than $38,000 in other
damages need be in controversy. Since that premise has collapsed, so does the
defendants’ argument. See, e.g., Nolen v. JP Morgan Chase Bank, NA, 2012 WL
4378200 at *5 (M.D. Ala. 2012) (“[B]ased upon the absence of evidence
estimating the amount of [hard damages], there was an insufficient foundation
from which to affix a value to the mental anguish and/or punitive damages
requests ….”); see also Mustafa v. Market Street Mortgage Corp., 840 F. Supp. 2d
1287, 1291 (M.D. Ala. 2012) (where hard damages were under $20,000, a demand
for emotional distress and punitive damages did not make up the difference
because “the Court has no way to make a non-speculative estimate as to their
The defendants invite the Court to use its judicial experience and common
sense to conclude that the amount in controversy exceeds $75,000, but even this
exhortation is premised on hard damages exceeding $37,000. (Doc. 21 at 7-8).
“Not having been provided any estimate as to compensatory damages, the Court is
ill-equipped to speculate as to any punitive damages award that a jury may
award.” Dean v. BAC Home Loans Servicing, LP, 2012 WL 353766 at *6 (M.D.
Ala. 2012) (rejecting the contention that judicial experience and common sense
were sufficient to fill the gap); see also Koester v. State Farm Insurance Co., 2012
WL 5265783 at *6 (N.D. Ala. 2012) (where hard damages were under $13,000,
The defendants have advanced no such reason, and the Court thus will not address their
The defendants have timely attempted to throw into the mix the plaintiff’s
demand for future lost income. (Doc. 1 at 8). But that demand is explicitly limited to the
retaliatory discharge claim, (Doc. 1, Exhibit A at 9), which, as discussed in Part I, is nonremovable under Section 1445(c). The defendants have not explained how such a
demand can be considered in assessing the amount in controversy. Nor have they offered
an estimate of future lost income, much less supported such a figure in any manner,
speculative or otherwise.
judicial experience and common sense did not suffice to show that a demand for
emotional distress and punitive damages placed over $62,000 in controversy).14
For the reasons set forth above, the motion to remand is granted. This
action is remanded to the Circuit Court of Washington County.
DONE and ORDERED this 29th day of April, 2013.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE
The defendants have not argued that judicial experience and common sense
make it obvious that the plaintiff’s medical bills and lost income must exceed $37,000,
nor could they successfully do so. Without actual evidence of these elements of damage,
their magnitude is necessarily speculative. Nothing in the amended complaint hints at the
plaintiff’s wages, and it mentions no medical treatment other than two office visits
shortly after the injury. (Doc. 1, Exhibit A at 4). Nor does the vague allegation of
“injuries to [the plaintiff’s] right leg and foot,” (id.), suggest substantial medical
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