Rangel v. Leviton Manufacturing Co., Inc.
Filing
13
ORDER GRANTING 5 Motion to Remand to State Court Signed by Judge Kathleen Cardone. (mc4, )
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
EL PASO DIVISION
JOSE ANTONIO RANGEL, et al.,
Plaintiffs,
v.
LEVITON MANUFACTURING CO.,
INC.,
Defendant.
§
§
§
§
§
§
§
§
§
§
EP-12-CV-04-KC
ORDER
On this day, the Court considered Jose Antonio Rangel, Luis E. Rivas, Eduardo Reza, and
Jesus Octavio Rey Velo’s (collectively “Plaintiffs”) “Motion to Remand” (“Motion”), ECF No.
5. After due consideration, the Court GRANTS the Motion.
I.
BACKGROUND
Plaintiffs were employees of Defendant Leviton Manufacturing Company, and worked in
Defendant’s facility in Juarez, Mexico. Def.’s Notice of and Pet. for Removal Ex. A
(“Complaint”) ¶ 4, ECF No. 1-1; see Def.’s Resp. to Pls.’ Mot. to Remand Ex. B. ¶ 2, ECF No.
6-2. In December of 2009, Defendant fired Plaintiffs. Compl. ¶ 4. Plaintiffs contested the firing
by initiating labor grievances against Defendant in Mexico. Compl. ¶ 4. The proceedings in
Mexico are still in progress. Compl. ¶ 4.
On April 29, 2010, Defendant filed a lawsuit in this Court (the “2010 Lawsuit”). Compl.
¶ 4; Def.’s Resp. to Pls.’ Mot. to Remand (“Response”) ¶4, ECF No. 6 (citing Leviton v. Rangel,
No. 3:10-cv-158-KC). In the 2010 Lawsuit, Defendant alleged that Plaintiffs created fraudulent
1
expense reports, converted Defendant’s inventory, and misappropriated corporate assets. Compl.
Ex. A (“2010 Complaint”) ¶ 13-15. Additionally, Defendants sought a declaration that Plaintiffs
“performed work and services for . . . Leviton’s United States Corporate entity and not Leviton’s
affiliated Mexican National Company.” Id. ¶ 8. Plaintiffs answered and filed counterclaims for
intentional infliction of emotional distress (“IIED”), unconscionable conduct, libel, and for
declaratory relief. Defs.’ Original Answer to Pl.’s Original Compl. Jury Demand and Countercl.
¶¶ 23-26, Leviton v. Rangel, No. 3:10-cv-158-KC (W.D. Tex. Sept. 24, 2010), ECF No. 11;
Defs.’ Original Answer to Pl.’s Original Compl. Jury Demand and Countercl. ¶¶ 23-26, Leviton
v. Rangel, No. 3:10-cv-158-KC (W.D. Tex. July 30, 2010), ECF No. 9 (collectively “2010
Answers & Counterclaims”).
The 2010 Lawsuit did not amount to much. As stated above, Defendant filed its
complaint in April of 2010, and the Court set trial for September 2, 2011. Am. Scheduling Order
at 1, Leviton v. Rangel, No. 3:10-cv-158-KC (W.D. Tex. July 29, 2011), ECF No. 25. During
the over one year of litigation, the parties did not take any depositions and did not file any
dispositive motions. See Joint Mot. to Extend ADR Deadline ¶¶ 4-5, Leviton v. Rangel, No.
3:10-cv-158-KC (W.D. Tex. July 27, 2011), ECF No. 23 (“2010 Motion to Extend Deadline”).
Then, just one month before trial, the parties voluntarily dismissed all of their claims. See
Compl. ¶ 4; All Parties’ Joint Stipulation of Dismissal of All Claims Without Prejudice (“2010
Stipulation of Dismissal”) ¶¶ 3-5, Leviton v. Rangel, No. 3:10-cv-158-KC (W.D. Tex. Aug. 3,
2011), ECF No. 27.
On November 23, 2011, Plaintiffs filed this lawsuit in Texas state court. Mot. ¶ 2.
Plaintiffs re-allege their claims for IIED, unconscionable conduct, libel, and for declaratory relief.
2
Compl. ¶¶ 5-7, 9. Further, Plaintiffs have added a claim for fraud. Compl. ¶ 9. Plaintiffs seek
actual damages, punitive damages, and attorney’s fees. See Compl. ¶ 10.
Specifically, Plaintiffs first allege that Defendant filed the 2010 Lawsuit for “the sole
purpose of intentionally inflicting emotional distress upon Plaintiffs.” Compl. ¶ 5. Second,
Plaintiffs allege that Defendant’s offering of a severance package conditioned on a waiver of
their rights under Mexican law was unconscionable conduct. Compl. ¶ 6. Next, in their claim
for libel, Plaintiffs allege that Defendant’s allegations in the 2010 Lawsuit were false and “were
brought against Plaintiffs maliciously and without due regard for the truthfulness or falsity of the
accusations.” Compl. ¶ 7. For their fourth claim, Plaintiffs allege that Defendant “fraudulently
falsified documents by forging Plaintiff Reza’s signature.” Compl. ¶ 8. Lastly, Plaintiffs seek a
declaration that the 2010 Lawsuit “was groundless, frivolous, and brought in bad faith and that
Plaintiffs suffered damages as a result of Defendant’s conduct.” Compl. ¶ 9.
On January 4, 2012, Defendant removed the case to this Court based on diversity
jurisdiction. Def.’s Notice of and Pet. for Removal, ECF No. 1. On January 13, 2012, Plaintiffs
filed this Motion seeking remand to state court. See Mot. ¶ 5.
II.
DISCUSSION
A.
Standard
“The district courts of the United States . . . are courts of limited jurisdiction. They
possess only that power authorized by Constitution and statute.” Exxon Mobil Corp. v.
Allapattah Servs., 545 U.S. 546, 552 (2005) (quoting Kokkonen v. Guardian Life Ins. Co. of Am.,
511 U.S. 375, 377 (1994)) (internal quotation omitted). By statute, a defendant may remove a
case to the federal district court, in the division embracing the place where such action is pending
3
in state court, if the district court has original jurisdiction over the matter. 28 U.S.C. § 1441(a)(b); Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). The district court must remand a
case to state court if, at any time before final judgment, it determines that it lacks subject matter
jurisdiction over the case. 28 U.S.C. § 1447(c).
When a party challenges the jurisdiction of the court, the burden is on the party seeking to
preserve the district court’s removal jurisdiction. Frank v. Bear Stearns & Co., 128 F.3d 919,
921-22 (5th Cir. 1997). Because removal deprives the state court of the opportunity to hear a
case properly before it, removal raises significant federalism concerns. Shamrock Oil & Gas
Corp. v. Sheets, 313 U.S. 100, 108-09 (1941); Carpenter v. Wichita Falls Indep. Sch. Dist., 44
F.3d 362, 365-66 (5th Cir. 1995). These federalism concerns mandate that federal courts strictly
construe the removal statutes. Shamrock Oil, 313 U.S. at 108-09; Carpenter, 44 F.3d at 365-66.
Therefore, federal courts should resolve any doubts about jurisdiction in favor of remand.
Gutierrez v. Flores, 543 F.3d 248, 251 (5th Cir. 2008) (citing In re Hot-Hed, Inc., 477 F.3d 320,
323 (5th Cir. 2007)).
B.
Plaintiffs’ Motion to Remand
In their Motion, Plaintiffs argue that Defendant has failed to establish federal jurisdiction.
See Mot. 2. Specifically, Plaintiffs argue that the amount in controversy does not exceed
$75,000, thus destroying diversity jurisdiction and mandating remand to state court. Mot. ¶¶ 6-9.
In response, Defendant argues that Plaintiffs’ claims for IIED, unconscionable conduct, libel,
fraud, and declaratory relief, “involve an amount in controversy greater than $75,000.” Resp. ¶
11.
A defendant can remove a case to federal court only if the plaintiff could have originally
4
filed the case in federal court. 28 U.S.C. § 1441(a)-(b); Caterpillar, 482 U.S. at 392. District
courts have original jurisdiction where the complaint presents a federal question or where the
parties are diverse and the amount in controversy exceeds $75,000. See 28 U.S.C. §§ 1331-32.
Here, the Complaint contains no federal question. See generally Compl. Therefore, the
Court will only have original jurisdiction if the parties are diverse and the amount in controversy
exceeds $75,000. The parties do not dispute that there is diversity of citizenship. See Mot. ¶¶ 69. Thus, the controlling question is whether the amount in controversy exceeds $75,000.
To determine the amount in controversy, courts generally accept a plaintiff’s good faith
claim. St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938). However, if
a plaintiff does not state an amount in the complaint, a defendant must prove by a preponderance
of the evidence that the amount in controversy at the time of removal exceeds $75,000. Garcia
v. Koch Oil Co. of Tex. Inc., 351 F.3d 636, 638-39 (5th Cir. 2003); Gebbia v. Wal-Mart Stores,
Inc., 233 F.3d 880, 883 (5th Cir. 2000). To determine if a defendant has met this burden, courts
first examine whether it is “‘facially apparent’ from the plaintiffs’ complaint” that the amount in
controversy exceeds $75,000. Garcia, 351 F.3d at 638-39 (quoting Allen v. R & H Oil & Gas
Co., 63 F.3d 1326, 1335 (5th Cir. 1995)). If it is not facially apparent, then the defendant must
present summary judgment-type evidence that the amount in controversy exceeds $75,000. Id.;
White v. FCI USA, Inc., 319 F.3d 672, 675 (5th Cir. 2003).
Plaintiffs have not stated a specific amount of damages.1 See generally Compl.
1
Under Texas law, Plaintiff is unable to plead a specific amount
of damages. See Tex. R. Civ. P. 47(b); Capital Brick, Inc. v.
Fleming Mfg. Co., Inc., 722 S.W .2d 399, 401 (Tex. 1986)
(explaining that Texas law prevents plaintiffs seeking
unliquidated damages from stating a specific amount of
damages in their complaint).
5
Therefore, Defendant must show by a preponderance of the evidence that jurisdiction is either
facially apparent or present summary judgment-type evidence to establish jurisdiction. See
Garcia, 351 F.3d at 638-39; White, 319 F.3d at 675.
1.
Facially apparent
Determining whether it is facially apparent that the amount in controversy exceeds
$75,000 is a fact-specific inquiry. See Felton v. Greyhound Lines, Inc., 324 F.3d 771, 774 (5th
Cir. 2003). Courts consider the types of claims, the types of damages sought, and the underlying
facts that suggest the extent of the damages. See id.; Chittick v. Farmers Ins. Exch., 844 F. Supp.
1153, 1155 (S.D. Tex. 1994). Moreover, common sense may guide a court’s analysis. Allen, 63
F.3d at 1336; see also Cross v. Bell Helmets, USA, 927 F. Supp. 209, 213-14 (E.D. Tex. 1996)
(applying “common experience” to a remand analysis).
This common sense standard has resulted in a system of case-by-case determinations.
Hannah v. Allstate Tex. Lloyd’s, No. EP–11–CV–269–KC, 2011 WL 5325257, at *3-4 (W.D.
Tex. Nov. 2, 2011) (collecting and analyzing cases in the Fifth Circuit); Rebecca Hild, Federal
Diversity Jurisdiction in the Fifth Circuit: Meeting the Amount in Controversy, 61 Baylor L.
Rev. 296, 315 (2009) (“No clear rules govern what is ‘facially apparent.’ What is facially
apparent will be determined case by case; neither the Fifth Circuit’s nor its district courts’
decisions can be easily predicted.”). However, a case-by-case methodology is not surprising
given the federalism concerns inherent in removal. See Gutierrez, 543 F.3d at 251; Felton, 324
F.3d at 774. The specific facts may lead the Court to doubt it has federal jurisdiction, and federal
courts should resolve any doubts about jurisdiction in favor of remand. See Gutierrez, 543 F.3d
at 251; Felton, 324 F.3d at 774.
6
In this case, Plaintiffs bring five claims: (1) IIED, (2) unconscionable conduct, (3) libel,
(4) fraud, and (5) and a request for declaratory relief. Compl. ¶¶ 5-9. The gist of Plaintiffs’
lawsuit is that Defendant filed the 2010 Lawsuit and fraudulently interfered with a pending
lawsuit in Mexico for the sole purpose of harassing Plaintiffs. See generally Compl. As required
by Texas’s procedural rules, Plaintiffs’ Complaint does not state an amount of damages. Beyond
failing to state an amount, the five page Complaint contains no facts that would help the Court
value Plaintiffs’ claims.
Because Plaintiffs’ Complaint is so sparse, Defendant relies on several arguments to
show that the amount in controversy exceeds $75,000. First, Defendant argues the Court should
aggregate the IIED, unconscionable conduct, libel, and fraud claims for all of the Plaintiffs.
Resp. ¶ 9. Second, Defendant argues the Court should aggregate all of the Plaintiffs’ punitive
damages claims. Resp. ¶¶ 8-9. Third, Defendant argues the value of Plaintiffs’ declaratory relief
alone establishes the amount in controversy exceeds $75,000. See Resp. ¶ 9. Finally, Defendant
argues the Court should include Plaintiffs’ counterclaims in the 2010 Lawsuit as part of the
amount in controversy. Resp. ¶ 9. The Court examines each argument in turn.
a.
Aggregating multiple plaintiffs
Defendant’s first contention — that the Court should aggregate all of the Plaintiffs’
claims — lacks support. Although the law provides for the aggregation of a single plaintiff’s
multiple claims against a single defendant, it is well established that the law does not aggregate
the claims of multiple plaintiffs to determine the amount in controversy. Snyder v. Harris, 394
U.S. 332, 335 (1969); Allen, 63 F.3d at 1330-31; Everett v. Verizon Wireless Inc., 460 F.3d 818,
822 (6th Cir. 2006). For example, if a plaintiff sues a defendant under seven different tort
7
theories, the law aggregates all of the plaintiff’s claims together to determine the amount in
controversy. See Snyder, 394 U.S. at 335; Everett, 460 F.3d at 822. But if there are two
plaintiffs and both sue the same defendant for breach of contract, the court does not aggregate the
two contract claims. See Snyder, 394 U.S. at 333; Pinel v. Pinel, 240 U.S. 594, 596 (1916);
Allen, 63 F.3d at 1330-31. In sum, federal law aggregates claims from a single plaintiff, but
generally not across multiple plaintiffs.
Like so many general rules, there is an exception. Courts aggregate the claims of all of
the plaintiffs if the plaintiffs have a “common and undivided interest.” Clay v. Field, 138 U.S.
464, 479-80 (1891) (internal citations omitted); Allen, 63 F.3d at 1330-31; Everett, 460 F.3d at
822. “The paradigm cases allowing aggregation of claims are those which involve a single
indivisible res, such as an estate, a piece of property (the classic example), or an insurance
policy.” Gilman v. BHC Sec., 104 F.3d 1418, 1423 (2d Cir. 1997) (internal quotations omitted);
see Allen, 63 F.3d at 1330-31.
In this case, Defendant suggests that the Court should aggregate the claims of all of the
Plaintiffs. See Resp. ¶ 9. But Defendant has not offered any facts to suggest that Plaintiffs’s
claims stem from a common and undivided interest, and the Court has found none. Rather, each
Plaintiff will likely have separate and distinct claims because each Plaintiff presumably suffered
a different amount of damage depending on how the allegedly unconscionable, libelous, and
fraudulent conduct affected each Plaintiff. See Compl. ¶¶ 6-8; Asociacion Nacional de
Pescasores a Pequena Escala o Artesanales de Colom. v. Dow Quimica de Colom. S.A., 988
F.2d 559, 563-64 (5th Cir. 1993) (explaining that just because a defendant’s one bad act allegedly
affected all of the plaintiffs does not make all of the claims part of a common, undivided
8
interest), abrogated on other grounds by Marathon Oil Co. v. Ruhrgas, 145 F.3d 211 (5th Cir.
1998). Therefore, Defendant cannot aggregate all of the Plaintiffs’ claims to establish
jurisdiction.
b.
Aggregating punitive damages
Defendant argues that the Court should aggregate all of the Plaintiffs’ punitive damages
claims. Resp. ¶¶ 8-9. Although Defendant is on slightly better footing with its second
contention, it too fails.
Prior to 2000, there was some support for Defendant’s contention. The Fifth Circuit in
Allen held that “because of the collective scope of punitive damages and their nature as
individual claims under Mississippi law, we hold that under Mississippi law” the court should
aggregate all of the plaintiffs’ requests for punitive damages. Allen, 63 F.3d at 1334-35 (1995).
Several district courts in Texas then relied on Allen and held that a federal court aggregates
punitive damages sought under Texas law. See Acosta v. Amoco Oil Co., 978 F. Supp. 703,
706-07 (S.D. Tex. 1997); Corley v. Sw. Bell Tel. Co., 924 F. Supp. 782, 786 (E.D. Tex. 1996);
In re Norplant Contraceptive Prods. Liab. Litig., 907 F. Supp. 244, 246 (E.D. Tex. 1995).
However, since those decisions, the Fifth Circuit has reexamined the issue of aggregating
punitive damages. In H & D Tire and Automotive-Hardware, Inc. v. Pitney Bowes, Inc., 227
F.3d 326, 330 (5th Cir. 2000) (“H&D Tire I”), the Fifth Circuit held that punitive damages
claims of multiple plaintiffs could not be aggregated. Id. The court explained that it was bound
to follow an earlier controlling opinion, Lindsey v. Alabama Telephone Co., and not Allen. See
id. at 329-30 (citing Lindsey, 576 F.2d 593 (5th Cir. 1978)). In Lindsey, the Fifth Circuit held
that the law does not aggregate the punitive damage claims across multiple plaintiffs to establish
9
jurisdiction. 576 F.2d at 595. To the extent Allen is still good law, it is now confined to the
unique circumstances of Mississippi law. See H & D Tire & Automotive-Hardware, Inc. v.
Pitney Bowes, Inc., 250 F.3d 302, 304-305 (5th Cir. 2001) (“H&D Tire II”) (denying request for
a re-hearing); Johnson v. Am. Gen. Fin., Inc., No. 4:02CV62LN, 2003 WL 21749565, at *2 (S.D.
Miss. July 22, 2003).
Given H&D Tire I and H&D Tire II, federal district courts in Texas have routinely held
that the court does not aggregate punitive damages sought under Texas law. See, e.g., Stout v.
Smithfield BioEnergy, LLC, No. 3:10-CV-1185-M, 2010 WL 5487843, *2 (N.D. Tex. Dec. 30,
2010); Sims v. AT & T Corp., No. 04-CV-1972-D, 2004 WL 2964983, at *4 (N.D. Tex. Dec. 22,
2004); Adams v. Nationwide Mut. Ins. Co., No. Civ.A. 3:02-CV-1607, 2003 WL 21251734, at *5
(N.D. Tex. 2003); Trapasso v. Prudential Prop. & Cas. Ins. Co., 220 F. Supp. 2d 628, 637 n.3
(E.D. Tex. 2002). And policy considerations support these holdings. Congress enacted the
amount in controversy requirement to ensure that “diversity jurisdiction does not flood the
federal courts with minor disputes.” Exxon Mobil, 545 U.S. at 552. If the federal courts were to
aggregate several plaintiffs’ “minor disputes” that include requests for punitive damages, the
jurisdictional amount would almost certainly be satisfied. And that would plainly defeat
Congress’s purpose in setting a minimum jurisdictional amount. See H&D Tire II, 250 F.3d at
305-06.
In conclusion, the Fifth Circuit does not allow Defendant to aggregate all of the Plaintiffs’
claims for punitive damages. See H&D Tire II, 250 F.3d at 305-06; H&D I, 227 F.3d at 330.
c.
Value of the declaratory relief
Defendant next contends the Court should include the value of the declaratory relief in
10
calculating the amount in controversy. Resp. ¶ 9. The governing law supports this contention. If
a plaintiff seeks a declaration regarding liability, the potential liability is the amount in
controversy. Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 333, 347 (1977); Garcia, 351
F.3d at 640 (citing Hunt, 432 U.S. at 347). In other words, “the amount in controversy is
determined by ‘the value of the right to be protected or the extent of the injury to be prevented.’”
Dow Agroscience, LLC v. Bates, 332 F.3d 323, 326 (5th Cir. 2003) (quoting St. Paul
Reinsurance Co., Ltd. v. Greenberg, 134 F.3d 1250, 1252-53 (5th Cir. 1998)), vacated and
remanded on other grounds, 544 U.S. 431 (2005).
Although Defendant is correct that the Court must include the value of the declaratory
relief, it is not facially apparent from this Complaint that value of the declaratory relief exceeds
$75,000. The first problem is that nowhere in the Complaint is there any hint of the value of the
declaratory relief. Second, it is not even clear exactly what kind of declaration Plaintiffs seek
from the Court. At first glance, the request for declaratory relief appears to reiterate Plaintiffs’
other claims — namely a declaration that the 2010 Lawsuit’s “sole purpose” was harassment and
“Plaintiffs suffered damages as a result.” See Compl. ¶ 9. This aligns with Plaintiffs’ other
allegations that Defendant filed the 2010 Lawsuit to cause Plaintiffs emotional distress and to
libel Plaintiffs. Under this reading, the value of the declaratory relief is the amount of harm
Plaintiffs suffered from the filing of the 2010 Lawsuit. And the Court has no information to
determine that amount. For example, the Court does not know if the alleged libel injured
Plaintiffs’ reputations such that they could not find new employment. Or perhaps, the Plaintiffs’
harm was de minimis and they are only suing to prove a point. In sum, the value of the
declaratory relief is not facially apparent from the Complaint.
11
Defendant offers a different reading of the declaratory relief claim. Defendant focuses on
Plaintiffs’ request that the Court declare that “Defendant’s federal lawsuit was groundless.”
Resp. ¶ 8; Compl. ¶ 9. Defendant stresses that the Plaintiffs attached the 2010 Complaint to their
current Complaint. See Resp. ¶ 7. Accordingly, Defendant argues that Plaintiffs are actually
requesting a declaration that Plaintiffs did not commit conversion, did not commit fraud, did not
commit misappropriation, and Defendant’s request for declaratory relief in the 2010 Lawsuit was
groundless. See Resp. ¶ 9. Defendant concludes that these declarations are worth more than
$75,000 because the extent of the possible liability exceeds $75,000. See Resp. ¶¶ 7-9.
The Court agrees that Plaintiff may be seeking a declaration that they did not commit
conversion, did not commit fraud, did not commit misappropriation, and that Defendant’s request
for declaratory relief in the 2010 Lawsuit was groundless. But even under this reading,
Defendants have not shown by a preponderance of the evidence that the amount in controversy
exceeds $75,000. In the 2010 Complaint, there is no indication of how to value Defendant’s
claims for fraud, misappropriation, or declaratory relief. 2010 Compl. ¶¶ 12-13, 15. Defendant
alleged that Plaintiffs created fraudulent expense reports, but the 2010 Complaint contains no
information on the value of those expense reports, or the amount of damage caused by the
allegedly fraudulent expense reports. Id. ¶ 13. Likewise, Defendant alleged Plaintiffs
misappropriated corporate assets, but again, the Court has no indication of the value of the
corporate assets or the amount of damage caused by the alleged misappropriation. Id. ¶ 15.
Finally, Defendant requested the Court declare that Defendant’s United States corporate entity,
and not Defendant’s affiliated Mexican company, employed Plaintiffs. Id. ¶ 12. For this claim,
the 2010 Complaint provides even less information. See id. It does not state why Defendant
12
wanted the declaration or the utility of such a declaration. See id. This makes it impossible for
the Court to guess how much that declaration is worth.
In contrast to the fraud, misappropriation and declaratory relief claims, Defendant’s
conversion claim does include some monetary information. Id. ¶ 14. The conversion claim
states that Plaintiffs converted inventory in an “amount far in excess of seventy-five thousand
dollars ($75,000.00).” Id. Defendant argues that the Court should accept this at face-value and
thus the conversion declaration “alone is in excess of $75,000.” See Resp. ¶ 9. The Court does
not find this persuasive because the statement is conclusory and there are no facts to support
Defendant’s valuation. See Dow Agroscience, 332 F.3d at 326 (“[A] bare allegation, by itself,
does not invest a federal court with jurisdiction.”); Asociacion Nacional, 988 F.2d at 565-66
(rejecting the defendant’s “bare allegations” of jurisdiction when the defendant “did not, and
probably could not have, offered any facts to support its valuation of plaintiffs’ claims”). The
Court again has no indication of the type of inventory, the value of the inventory, or even the
possible damages suffered by Defendant. Therefore, it is not facially apparent that the amount in
controversy in the declaratory judgment claim exceeds the $75,000 jurisdictional minimum. See
White, 319 F.3d at 675.
It is true that courts generally accept a plaintiff’s good faith claim of damages in a
complaint to determine the amount in controversy. St. Paul, 303 U.S. at 288-89. But that rule
applies to a pending case in which the plaintiff initially files in federal court. See id. at 288, 29091. That is not the situation here. Defendant removed this case, and thus Defendant has the
burden of showing that the amount in controversy exceeds $75,000. See Garcia, 351 F.3d at
638. Defendant cites no authority, and the Court has found none, to suggest that the Court must
13
accept a defendant’s unsubstantiated allegations from a previous lawsuit as conclusive to
determine the value of declaratory relief in a later removed case.
Moreover, the Court has good reason to not accept Defendant’s unsubstantiated
allegations from 2010 Lawsuit as conclusive. First, those allegations are almost two years old.
Thus, the value of the conversion claim could have changed since then. Moreover, Defendant
may now have additional information about the extent of the damages, or lack thereof, given the
almost two years it had to investigate the claims. Second, Defendant litigated the 2010 Lawsuit
in this Court, and the record shows that Defendant failed to diligently prosecute its case and then
dismissed the case on the eve of trial. See Compl. ¶ 4; 2010 Mot. to Extend Deadline ¶¶ 4-5;
2010 Stipulation of Dismissal ¶ 2-4. Applying the Court’s common sense, it seems unlikely that
the parties would have tepidly litigated for over a year, and then just dropped the lawsuit, if the
case was really worth well in excess of $75,000. See Allen, 63 F.3d at 1336.
In summary, the Complaint is devoid of details or facts that would help quantify the
extent of potential liability in this case. As stated above, it is not even clear from the Complaint
what relief Plaintiffs seek in their declaratory judgment claim. Under one interpretation, the
value of the declaratory relief is how much harm Plaintiffs suffered from the filing of the 2010
Lawsuit. According to the other interpretation, the value of the declaratory relief is the value of
Defendant’s 2010 Lawsuit. Yet, even if the Court could decipher which interpretation was more
likely the correct one, the Court does not have sufficient facts to quantify the value. Thus, the
Court holds that Defendant has not shown that it is facially apparent from this Complaint that
value of the declaratory relief exceeds $75,000. See White, 319 F.3d at 675.
14
d.
Plaintiffs’ counterclaims in the 2010 Lawsuit
Defendant’s final argument is that the Court should include Plaintiffs’ counterclaims in
the 2010 Lawsuit as part of the amount in controversy. See Resp. ¶¶ 7, 9. However, this
argument also fails because Defendant provides no explanation why the Court should include
Plaintiffs’ counterclaims from the 2010 Lawsuit. Perhaps, Defendant is suggesting that Plaintiffs
seek a declaration that their counterclaims in the 2010 Lawsuit were valid. But the Complaint
makes no such statement. See Compl. ¶ 9. Rather the Complaint states that “Defendant’s federal
lawsuit was groundless.” Compl. ¶ 9 (emphasis added).
Additionally, the Court notes that Plaintiffs’ current claims for IIED, unconscionable
conduct, and libel match its previous counterclaims in the 2010 Lawsuit. Compare Compl. ¶¶ 57, with 2010 Answers & Countercls. ¶¶ 23-26. Defendant cannot double count these claims to
establish federal jurisdiction.
In summary, the Court rejects Defendant’s argument that Plaintiffs’ counterclaims from
the 2010 Lawsuit should be considered to determine the amount in controversy in this lawsuit.
e.
Summary and conclusion
In conclusion, Defendant has failed to show by a preponderance of the evidence that
jurisdiction is facially apparent. The Court notes that each Plaintiff presents four claims and
seeks actual damages, punitive damages, and attorney’s fees. Accordingly, the amount in
controversy could possibly exceed $75,000. However, Defendant has not shown by a
preponderance of the evidence, or more likely than not, that it is facially apparent that the amount
in controversy exceeds $75,000. See Felton, 324 F.3d at 774; Allen, 63 F.3d at 1336. The Court
must hold Defendant to that standard given that federal courts resolve any doubts about
15
jurisdiction in favor of remand. See Dow Agroscience, 332 F.3d at 326; Carpenter, 44 F.3d at
365-66. Therefore, the Court holds that it is not facially apparent that the amount in controversy
exceeds $75,000.
2.
Summary judgment-type evidence
Given that Defendant has failed to establish that it is facially apparent that the amount in
controversy exceeds $75,000, the Court turns to Defendant’s summary judgment-type evidence.
See Garcia, 351 F.3d at 638-39; White, 319 F.3d at 675. Defendant offers two pieces of
summary judgment-type evidence. Resp. ¶ 10. The Court examines each.
First, Defendant offers the affidavit of Defendant’s general counsel, Vincent LoNigro.
Resp. ¶ 10. In his affidavit, LoNigro repeats the same exact phrase from the 2010 Complaint —
Plaintiffs converted property in an “amount far in excess of seventy-five thousand dollars
($75,000.00).” Resp. Ex. B ¶ 2. LoNigro does not give any facts about the type of inventory, the
value of the inventory, or even the possible damages suffered by Defendant. See Resp. Ex. B ¶ 2.
In sum, Defendant is again asking the Court to simply accept its conclusory statement, albeit this
time in the form of an affidavit. This is insufficient to establish jurisdiction given that Defendant
has the burden of proof and federal courts resolve any doubts about jurisdiction in favor of
remand. See Gutierrez, 543 F.3d at 251; Asociacion Nacional, 988 F.2d at 565-66.
Second, Defendant offers evidence that Plaintiffs’ salaries ranged from roughly $95,000
to over $200,000. Resp. Ex. C, ECF No. 6-3. But the Court is at a loss to understand the
relevance of Plaintiffs’ salaries. Plaintiffs are suing for IIED, unconscionable conduct, libel,
fraud, and declaratory relief. Compl. ¶¶ 5-9. There is no suggestion in Plaintiffs’ Complaint that
they are suing for lost wages. See id. And in its Response, Defendant never explains the
16
relevance of the evidence. See Resp. ¶ 10. The only connection provided by Defendant is via
LoNigro’s affidavit. In that affidavit, LoNigro states that Plaintiffs are suing Defendant in
Mexico for lost wages. Resp. Ex. B ¶ 4. But Defendant has not explained how that has anything
to do with this lawsuit. See Resp. ¶¶ 9-10.
In sum, Defendant’s affidavit and evidence of the Plaintiffs’ salaries is not sufficient to
show by a preponderance of the evidence that the Court has subject matter jurisdiction.
III.
CONCLUSION
For the reasons stated above, the Court GRANTS Plaintiffs’ Motion (ECF No. 5). The
Court REMANDS this case back to County Court at Law Number Five of El Paso County,
Texas.
The Clerk shall close the case.
SO ORDERED.
SIGNED on this 14th day of March, 2012.
______________________________________
KATHLEEN CARDONE
UNITED STATES DISTRICT JUDGE
17
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?