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Purple Passion, Inc. v. RCN Telecom Services, Inc.

United States District Court, S.D. New York
Aug 11, 2005
406 F. Supp. 2d 245 (S.D.N.Y. 2005)

Summary

finding that the "strong weight of authority" and policy both favor the "traditional rule" that courts are not divested of jurisdiction when the amount in controversy drops below the jurisdictional threshold

Summary of this case from Barefield v. HSBC Holdings PLC

Opinion

No. 05CIV3795(GEL).

August 11, 2005.

Anthony X. Arturi, Arturi, D'Argenio Guaglardi, LLP, Englewood Cliffs, NJ, Barry Scott Guaglardi, Arye, Lustig Sassower, P.C., New York, NY, for defendant.


OPINION AND ORDER


Defendant removed this negligence action from New York Supreme Court on grounds of diversity of jurisdiction, noting that the complaint sought damages of at least $100,000.00. By letter to the Court, plaintiff now seeks to file an amended complaint reducing the amount of damages sought to $74,000, and a consequent remand to the state court. (Letter of Alan Richard Levy, Esq., to the Court, dated August 3, 2005.) Plaintiff citesVillano v. Kohl's Dep't Stores, Inc., 362 F. Supp. 2d 418 (S.D.N.Y. 2005), for the proposition that a case may be remanded based on such a subsequent amendment of the complaint.

This Court respectfully disagrees with the reasoning ofVillano. It is long established law that events occurring after removal that reduce the amount in controversy, including action by the plaintiff "after removal, by stipulation, by affidavit, or by amendment of his pleadings, [that] reduces the claim below the requisite amount, . . . does not deprive the district court of jurisdiction." St. Paul Mercury Indem. Co. v. Red Cab Co., 303 US. 283, 292 (1938). The Court in Villano believed that this binding authority has been abrogated by a 1988 amendment to 28 U.S.C. § 1447(c). That statute formerly required remand "[i]f at any time before final judgment it appears that the case was removed improvidently and without jurisdiction"; the 1988 amendment deleted the reference to improvident removal, and now calls for remand "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction."

Although the Second Circuit has not addressed this argument, it has been rejected by every Court of Appeals that has considered it. Poore v. Am.-Amicable Life Ins. Co. of Texas, 218 F.3d 1287, 1290-91 (11th Cir. 2000) (joining "every Circuit that has addressed this issue" and holding that "events occurring after removal which may reduce the damages recoverable below the amount in controversy requirement do not oust the district court's jurisdiction"); Hudson United Bank v. LiTenda Mortgage Corp., 142 F.3d 151, 157 n. 8 (3d Cir. 1998) ("Congress did not mean to upset [the focus on jurisdiction at the time of removal] and that [the traditional rule] remain[s] in effect unchanged by the intervening textual modifications to § 1447(c)."); Doddy v. Oxy USA, Inc., 101 F.3d 448, 456 n. 4 (5th Cir. 1996) ("[Section] 1447(c) cannot be read to overrule the repeatedly expressed view that changes after removal cannot eliminate jurisdiction and require remand."); Baldridge v. Kentucky-Ohio Trans., Inc., 983 F.2d 1341, 1348 n. 11 (6th Cir. 1993) ("[C]ourts have not construed [the amendment] in this revolutionary way."); In re Shell Oil Co., 966 F.2d 1130, 1133 (7th Cir. 1992) ("Neither the text of the revised § 1447(c) nor its legislative history implies that Congress altered the traditional view . . . that jurisdiction present at the time a suit is filed or removed is unaffected by subsequent acts."). The treatise writers similarly remain unanimous that "once a case that has been initiated in state court has been removed properly, subsequent events that reduce the amount recoverable, such as the plaintiff's amendment of the complaint, will not defeat the federal court's subject matter jurisdiction." 14C Charles Alan Wright et al., Federal Practice and Procedure § 3725, at 115 (3d ed. 1998); see also 16 James Wm. Moore, Moore's Federal Practice § 107.41[2][C], at 216 (3d ed. 2005) (stating "if the plaintiff voluntarily lowers the amount in controversy after the defendant removes the case, that change does not deprive the federal court of jurisdiction, if the amount in controversy exceeded the jurisdictional minimum at the time of removal," but noting minority view that post-removal stipulation reducing amount in controversy can divest jurisdiction).

Moreover, the Supreme Court has remarked, since the amendment to § 1447(c) but without referring to it, that it has "consistently held that if jurisdiction exists at the time an action is commenced, such jurisdiction may not be divested by subsequent events." Freeport-McMoRan, Inc. v. K N Energy, Inc., 498 U.S. 426, 428 (1991). The Second Circuit has also recited the rule of St. Paul Mercury that "[e]vents occurring subsequent to the institution of suit which reduce the amount recoverable below the statutory limit do not oust jurisdiction," subsequent to the 1988 amendment of § 1447(c) (albeit in a non-removal context and without reference to the amendment), without any indication that the rule might now be qualified. Tongkook America, Inc. v. Shipton Sportswear Co., 14 F.3d 781, 785 (2d Cir. 1994); see also Wolde-Meskel v. Vocational Instruction Project Community Servs., Inc., 166 F.3d 59, 62 (2d Cir. 1999) (holding that summary judgment reducing claim to below the statutory jurisdictional amount does not divest jurisdiction, without reference to any possible effect of the 1988 amendment). At least one district judge of this Court has rejected the analysis relied on by Villano on the ground that Tongkook America demonstrates that "the St. Paul Mercury rule still obtains in this Circuit." Munoz v. Sesame Place, Inc., No. 97 Civ. 5055 (SHS), 1998 WL 150495, at *1 (S.D.N.Y. Mar. 30, 1998); see also Williams v. NYS Livery Service, Inc., No. 95 Civ. 401 (PKL), 1995 WL 491485, at *2-*3 (S.D.N.Y. Aug. 17, 1995) (applying St. Paul Mercury rule to deny remand, subsequent to amendment of § 1447(c), but without discussion of amendment).

The strong weight of authority is thus against plaintiff's position. Policy also favors the traditional rule. While theVillano rule has the advantage of dismissing from the federal courts actions of lesser consequence, it facilitates gamesmanship and forum- and judge-shopping by encouraging plaintiffs filing in state court to seek exorbitant damages against the chance the case will not be removed, and then to reduce their demands if the case is removed to federal court, or not, depending on their happiness with the assigned judge. Such gamesmanship, and the resulting ping-ponging of cases from state to federal court and back again, should not be permitted.

Accordingly, plaintiff's request for leave to amend the complaint to reduce the damages is granted, but the application for remand to state court is denied.

SO ORDERED.


Summaries of

Purple Passion, Inc. v. RCN Telecom Services, Inc.

United States District Court, S.D. New York
Aug 11, 2005
406 F. Supp. 2d 245 (S.D.N.Y. 2005)

finding that the "strong weight of authority" and policy both favor the "traditional rule" that courts are not divested of jurisdiction when the amount in controversy drops below the jurisdictional threshold

Summary of this case from Barefield v. HSBC Holdings PLC

finding that 28 U.S.C. § 1447(c) does not permit a case to be remanded based on a post-removal amendment of the complaint to reduce the amount of damages sought below the threshold required for diversity jurisdiction

Summary of this case from Cottingham v. Tutor Perini Bldg. Corp.

concluding that although 28 U.S.C. § 1447(c) requires a district court to remand "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction," this statute does not upset the well-established rule that a district court's subject matter jurisdiction, once established, is unaffected by post-removal reductions in the amount in controversy, and citing concurring cases from five circuit courts

Summary of this case from Yong Qin Luo v. Mikel

denying motion to remand where plaintiff amended their complaint to reduce damages sought to $74,000

Summary of this case from Branyan v. Sw. Airlines Co.

denying remand in similar circumstance where plaintiff reduced damage demand to below amount-in-controversy threshold in attempt to defeat diversity jurisdiction

Summary of this case from Michael Kors (Usa), Inc. v. Gram

denying motion to remand where plaintiff sought to reduce the amount in controversy from $100,000 to $74,000 but permitting amendment of the complaint to reflect reduction

Summary of this case from Bercy v. American Airlines, Inc.

discussing at length the strong weight of authority and policy reasons for the traditional rule; granting plaintiff's motion to amend complaint to reduce damages amount to $74,000 but denying application for remand to state court

Summary of this case from Rodriguez v. Allstate Indem. Co.

permitting post-filing events to dictate jurisdiction for remand purposes, "facilitates gamesmanship and forum-and judge- shopping . . . [s]uch gamesmanship, and the resulting ping-ponging of cases from state to federal court and back again, should not be permitted"

Summary of this case from Haag v. Hyundai Motor Am.

noting the well-established rule that a district court's removal jurisdiction, once established, is unaffected by post-removal reductions in the amount in controversy

Summary of this case from Law Offices of K.C. Okoli, P.C. v. BNB Bank, N.A.

noting that a post-removal amendment stripping jurisdiction facilitates "gamesmanship, and the resulting ping-ponging of cases from state to federal court and back again, should not be permitted"

Summary of this case from Hatcher v. Lowe's Home Centers, Inc.

In Purple Passion, Inc. v. RCN Telecom Services, Inc., 406 F.Supp.2d 245, 247 (S.D.N.Y. 2005), the Court aptly noted, in a comparable circumstance, "that to permit post-filing events to dictate jurisdiction for remand purposes facilitates gamesmanship and forum and judge shopping by encouraging plaintiffs filing in state court to seek exorbitant damages against the chance the case will not be removed, and then to reduce their demands if the case is removed to federal court, or not, depending on their happiness with the assigned judge.

Summary of this case from Collins v. Flynn

disagreeing withVillano and citing, inter alia, contrary circuit cases

Summary of this case from Lowe v. Sears Holding Corp.
Case details for

Purple Passion, Inc. v. RCN Telecom Services, Inc.

Case Details

Full title:PURPLE PASSION, INC., Plaintiff, v. RCN TELECOM SERVICES, INC., Defendant

Court:United States District Court, S.D. New York

Date published: Aug 11, 2005

Citations

406 F. Supp. 2d 245 (S.D.N.Y. 2005)

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