Amount in controversy

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Amount in controversy (sometimes called jurisdictional amount) is a term used in civil procedure to denote the amount at stake in a lawsuit, in particular in connection with a requirement that persons seeking to bring a lawsuit in a particular court must be suing for a certain minimum amount (or below a certain maximum amount) before that court may hear the case.

Contents

United States

In federal courts

Diversity jurisdiction

In United States federal courts, the term currently applies only to cases brought under diversity jurisdiction, meaning that the court is able to hear the case only because it is between citizens of different states. In such cases, the U.S. Congress has decreed in 28 U.S.C. § 1332(a) that the court may hear such suits only where "the matter in controversy exceeds the sum or value of $75,000." This amount represents a significant increase from earlier years.

Congress first established the amount in controversy requirement when it created diversity jurisdiction in the Judiciary Act of 1789, pursuant to its powers under Article III of the U.S. Constitution, the amount being $500. It was raised to $2,000 in 1887, to $3,000 in 1911, to $10,000 in 1958, to $50,000 in 1988, and finally to the current $75,000 in 1996.

The use of the word "exceeds" in Section 1332 implies that the amount in controversy must be more than $75,000; a case removed from state court to federal court must be remanded back to state court if the amount in controversy is exactly $75,000.00. [1]

Federal question jurisdiction

Congress did not create a consistent federal question jurisdiction, which allows federal courts to hear any case alleging a violation of the Constitution, laws, and treaties of the United States, until 1875, when Congress created the statute which is now found at 28 U.S.C.   § 1331: "The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." At that time, such cases had the same amount in controversy requirement as the diversity cases. Congress eliminated this requirement in actions against the United States in 1976 and in all federal question cases in 1980.

Aggregation of claims

Where a single plaintiff has multiple unrelated claims against a single defendant, that plaintiff can aggregate those claims – that is, add the amounts together – to satisfy the amount in controversy requirement. In cases involving more than one defendant, a plaintiff may aggregate the amount claimed against multiple defendants “only if the defendants are jointly liable.” Middle Tennessee News Co., Inc. v. Charnel of Cincinnati, Inc., 250 F.3d 1077, 1081 (7th Cir. 2001). However, “if the defendants are severally liable, plaintiff must satisfy the amount in controversy requirement against each individual defendant.” The 5–4 decision in Exxon Mobil Corp. v. Allapattah Services, Inc. , 545 U.S. 546 (2005), held that a federal court has supplemental jurisdiction over claims of other plaintiffs who do not meet the jurisdictional amount for a diversity action, when at least one plaintiff in the action does satisfy the jurisdictional amount.

The standard for dismissing a complaint for lack of meeting the amount in controversy is a rather high one in federal court. In 1938, Justice Owen Roberts set forth the "legal-certainty test", [2] which is still used today:

It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal. The inability of plaintiff to recover an amount adequate to give the court jurisdiction does not show his bad faith or oust the jurisdiction. Nor does the fact that the complaint discloses the existence of a valid defense to the claim. But if, from the face of the pleadings, it is apparent to a legal certainty that the plaintiff cannot recover the amount claimed or if, from the proofs, the court is satisfied to a like certainty that the plaintiff never was entitled to recover that amount, and that his claim was therefore colorable for the purpose of conferring jurisdiction, the suit will be dismissed. [3]

The validity of the amount of damages claimed is considered a threshold issue of law for a judge to decide at the commencement of the case.[ citation needed ]

The legal certainty test is often heavily litigated in personal injury or wrongful death cases, in the situation where they are removed by a defendant to federal court on the basis of diversity jurisdiction, and then the plaintiff moves to remand to state court. Several U.S. states prohibit plaintiffs in such cases from demanding a specific amount of money in the ad damnum section of their complaints, because of serious problems with unscrupulous attorneys gaining undue publicity by simply demanding outrageous damages numbers that they cannot possibly prove at trial. [4] Therefore, many such complaints cannot and do not state an amount in controversy on their face, which puts defendants in the awkward position of having to argue to the federal court that plaintiffs could theoretically recover a sum in excess of $75,000, while simultaneously maintaining that plaintiffs are not entitled to anything at all. [5]

In state courts

Each state has the power to set its own amount in controversy requirements for its own courts, but every state must offer some outlet for citizens to sue for violations of their rights, even if they are seeking no money. Most states have several levels of trial courts, with different amount-in-controversy requirements which must be met to gain access to higher levels of courts. For example, in the state of Virginia, the lowest level of court, the Virginia General District Court has exclusive jurisdiction to hear cases where the amount in controversy is $4,500 or less, and shares authority with the Virginia Circuit Court to try cases involving sums above $4,500 and up to $25,000. The Virginia Circuit Court, in turn, has exclusive jurisdiction where the amount in controversy is greater than $25,000.

A few states like California have decided that it is more efficient to unify all trial courts so that judges and support staff can be more easily reassigned where needed. However, in California, nearly all lawsuits involving an amount in controversy up to $25,000 are classified as "limited civil cases," [6] which are subject to special simplified procedural rules intended to hold down litigation costs. [7]

Related Research Articles

In legal terminology, a complaint is any formal legal document that sets out the facts and legal reasons that the filing party or parties believes are sufficient to support a claim against the party or parties against whom the claim is brought that entitles the plaintiff(s) to a remedy. For example, the Federal Rules of Civil Procedure (FRCP) that govern civil litigation in United States courts provide that a civil action is commenced with the filing or service of a pleading called a complaint. Civil court rules in states that have incorporated the Federal Rules of Civil Procedure use the same term for the same pleading.

<span class="mw-page-title-main">Federal jurisdiction (United States)</span> Legal scope of the powers of the U.S. federal government

Federal jurisdiction refers to the legal scope of the government's powers in the United States of America.

In law as practiced in countries that follow the English models, a pleading is a formal written statement of one party's claims or defenses in response to another party's complaint(s) in a civil action. The parties' pleadings in a case define the issues to be adjudicated in the action.

Interpleader is a civil procedure device that allows a plaintiff or a defendant to initiate a lawsuit in order to compel two or more other parties to litigate a dispute. An interpleader action originates when the plaintiff holds property on behalf of another, but does not know to whom the property should be transferred. It is often used to resolve disputes arising under insurance contracts.

A declaratory judgment, also called a declaration, is the legal determination of a court that resolves legal uncertainty for the litigants. It is a form of legally binding preventive by which a party involved in an actual or possible legal matter can ask a court to conclusively rule on and affirm the rights, duties, or obligations of one or more parties in a civil dispute. The declaratory judgment is generally considered a statutory remedy and not an equitable remedy in the United States, and is thus not subject to equitable requirements, though there are analogies that can be found in the remedies granted by courts of equity. A declaratory judgment does not by itself order any action by a party, or imply damages or an injunction, although it may be accompanied by one or more other remedies.

<span class="mw-page-title-main">Subject-matter jurisdiction</span> Type of jurisdictional court authority

Subject-matter jurisdiction, also called jurisdiction ratione materiae, is a legal doctrine holding that a court can only hear and decide cases of a particular type. The subject matter jurisdiction of a court may be described as either limited jurisdiction, meaning it is able to hear only certain types of cases, or general jurisdiction, meaning it is presumed able to hear and decide all types of cases. For instance, a bankruptcy court only has the authority to hear bankruptcy cases.

<span class="mw-page-title-main">Diversity jurisdiction</span> U.S. court jurisdiction over persons of different states or nationalities

In the law of the United States, diversity jurisdiction is a form of subject-matter jurisdiction that gives United States federal courts the power to hear lawsuits that do not involve a federal question. For a federal court to have diversity jurisdiction over a lawsuit, two conditions must be met. First, there must be "diversity of citizenship" between the parties, meaning the plaintiffs must be citizens of different U.S. states than the defendants. Second, the lawsuit's "amount in controversy" must be more than $75,000. If a lawsuit does not meet these two conditions, federal courts will normally lack the jurisdiction to hear it unless it involves a federal question, and the lawsuit would need to be heard in state court instead.

<span class="mw-page-title-main">Federal question jurisdiction</span> Type of U.S. court subject-matter jurisdiction

In United States law, federal question jurisdiction is a type of subject-matter jurisdiction that gives United States federal courts the power to hear civil cases where the plaintiff alleges a violation of the United States Constitution, federal law, or a treaty to which the United States is a party. The federal question jurisdiction statute is codified at 28 U.S.C. § 1331.

Louisville & Nashville Railroad Company v. Mottley, 211 U.S. 149 (1908), was a United States Supreme Court decision that held that under the existing statutory scheme, federal question jurisdiction could not be predicated on a plaintiff's anticipation that the defendant would raise a federal statute as a defense. Instead, such jurisdiction can only arise from a complaint by the plaintiff that the defendant has directly violated some provision of the Constitution, laws, or treaties of the United States. This reading of the federal question jurisdiction statute is now known as the well-pleaded complaint rule.

The Virginia General District Court (GDC) is the lowest level of the Virginia court system, and is the court that most Virginians have contact with. The jurisdiction of the GDC is generally limited to traffic cases and other misdemeanors, civil cases involving amounts of under $25,000. There are 32 GDC districts, each having at least one judge, and each having a clerk of the court and a courthouse with courtroom facilities.

Ad quod damnum or ad damnum is a Latin phrase meaning "according to the harm" or "appropriate to the harm". It is used in tort law as a measure of damage inflicted, and implying a remedy, if one exists, ought to correspond specifically and only to the damage suffered. It is also used in pleading, as the statement of the plaintiff's money loss or damages claimed. An ad damnum clause is also sometimes called a "prayer for relief."

<span class="mw-page-title-main">Removal jurisdiction</span>

In the United States, removal jurisdiction allows a defendant to move a civil action or criminal case filed in a state court to the United States district court in the federal judicial district in which the state court is located. A federal statute governs removal.

Arbaugh v. Y & H Corp., 546 U.S. 500 (2006), is a United States Supreme Court decision involving Title VII of the Civil Rights Act of 1964, which provides a private cause of action to victims of employment discrimination. The Court ruled that Title VII's "employee-numerosity requirement," which limits potential defendants to those maintaining at least fifteen employees, is not a limit on a court's jurisdiction to hear Title VII claims. The requirement is instead a substantive element of a Title VII claim, which means that a defendant must raise the issue prior to verdict or the requirement will be waived.

<span class="mw-page-title-main">Supplemental jurisdiction</span>

Supplemental jurisdiction, also sometimes known as ancillary jurisdiction or pendent jurisdiction, is the authority of United States federal courts to hear additional claims substantially related to the original claim even though the court would lack the subject-matter jurisdiction to hear the additional claims independently. 28 U.S.C. § 1367 is a codification of the Supreme Court's rulings on ancillary jurisdiction and pendent jurisdiction and a superseding of the Court's treatment of pendent party jurisdiction.

Owen Equipment & Erection Co. v. Kroger, 437 U.S. 365 (1978), is a case that was decided by the United States Supreme Court regarding the civil procedure subject of ancillary jurisdiction.

Caterpillar Inc. v. Lewis, 519 U.S. 61 (1996), held that federal jurisdiction predicated on diversity of citizenship can be sustained even if there did not exist complete diversity at the time of removal to federal court, so long as complete diversity exists at the time the district court enters judgment.

The Virginia Circuit Courts are the state trial courts of general jurisdiction in the Commonwealth of Virginia. The Circuit Courts have jurisdiction to hear civil and criminal cases. For civil cases, the courts have authority to try cases with an amount in controversy of more than $4,500 and have exclusive original jurisdiction over claims for more than $25,000. In criminal matters, the Circuit Courts are the trial courts for all felony charges and for misdemeanors originally charged there. The Circuit Courts also have appellate jurisdiction for any case from the Virginia General District Courts claiming more than $50, which are tried de novo in the Circuit Courts.

<i>Rogers v. Wal-Mart Stores, Inc.</i>

Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868, was a case decided by the 6th Circuit that held that remand to a state court cannot be achieved after removal to a federal court by lowering the damages sought to fall below the amount in controversy requirement.

Exxon Mobil Corp. v. Allapattah Services, Inc., 545 U.S. 546 (2005), was a case in which the Supreme Court of the United States held that 28 U.S.C. § 1367 permits supplemental jurisdiction over joined claims that do not individually meet the amount-in-controversy requirements of § 1332, provided that at least one claim meets the amount-in-controversy requirements.

Dart Cherokee Basin Operating Co. v. Owens, 574 U.S. 81 (2015), was a case in which the Supreme Court of the United States clarified procedures for removing a class action lawsuit from state court to federal court. The case involved a dispute about revenue from oil and gas leases in which the defendant filed a motion to remove the case from a state court in Kansas to the United States District Court for the District of Kansas. However, the plaintiff argued that the defendant's motion was defective because the defendant's notice of removal did not include evidence demonstrating that the amount in controversy satisfied the jurisdictional threshold. The United States District Court for the District of Kansas ultimately ruled the case should be returned to the state court, and the United States Court of Appeals for the Tenth Circuit declined to review the district court's decision.

References

  1. ↑ Freeland v. Liberty Mutual Fire. Ins. Co. , 632 F.3d 250, 252-253 (6th Cir. 2011). Judge Amul Thapar explained in Freeland: "The amount in controversy in this declaratory judgment action is exactly one penny short of the jurisdictional minimum of the federal courts."
  2. ↑ Subrin, Stephen N.; Minow, Martha L.; Brodin, Mark S.; and Main, Thomas O. Civil Procedure: Doctrine, Practice, and Context, Second Edition. p. 698. Aspen Publishers, 2004. ISBN   0-7355-4086-1
  3. ↑ St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 289 (1938) (emphasis added)
  4. ↑ Hart, William; Blanchard, Roderick D. (2007). Litigation and Trial Practice (6th ed.). Clifton Park, NY: Delmar Learning. p. 146. ISBN   978-1418016890 . Retrieved 15 June 2020.
  5. ↑ Singer v. State Farm Mut. Ins. Co. , 116 F.3d 373, 375 (9th Cir. 1997). The court explained: "The parties to this case were caught between the California statute prohibiting statement of an ad damnum, and the traditional federal removal framework, which bases removal on the amount stated in the ad damnum."
  6. ↑ See California Code of Civil Procedure Sections 85-89.
  7. ↑ California Code of Civil Procedure Sections 90-100.
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