In the

United States Court of Appeals

For the Seventh Circuit

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No. 04-1396

PATRICK J. MUNRO and CLAUDETTE MUNRO,

Plaintiffs-Appellants,

v.

GOLDEN RULE INSURANCE COMPANY,

Defendant-Appellee.

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Appeal from the United States District Court

for the Eastern District of Wisconsin.

No. 02 C 420—Patricia J. Gorence, Magistrate Judge.

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ARGUED NOVEMBER 8, 2004—DECIDED DECEMBER 27, 2004

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Before BAUER, EASTERBROOK and KANNE, Circuit Judges.

BAUER, Circuit Judge. At all times relevant to this action,

Plaintiffs-Appellants Patrick and Claudette Munro were

covered by a health insurance policy issued by DefendantAppellee Golden Rule Insurance Company. From March 1999

through March 2002, Claudette Munro incurred medical

bills in connection with a series of hospital visits. Golden

Rule paid $289,650.91 of these bills but contested inpatient

expenses totaling $3,885.01, arguing that they were not

covered under the terms of the policy. The Munros filed an
2 No. 04-1396

action against Golden Rule in the Milwaukee County Circuit

Court to compel payment, alleging bad-faith breach of

contract. Golden Rule removed the case to federal court, citing diversity of citizenship. While the case was pending,

Golden Rule resolved the billing dispute and paid the outstanding charges of $3,885.01. The Munros responded by

dismissing their breach of contract claim, but they continued

to press their claim of bad faith. The district court granted

summary judgment in favor of Golden Rule, and the Munros

now appeal.

Diversity jurisdiction requires that the amount in controversy be greater than $75,000. 28 U.S.C. § 1332. We look

to state law to determine whether this statutory threshold

has been met. Horton v. Liberty Mut. Ins. Co., 367 U.S. 348,

352-53 (1961). Both parties note that the Munros sought

$3,885.01 in their complaint. In addition, both parties agree

that, under Wisconsin law, an insured who is successful in

a bad-faith action can recover attorney fees as compensatory damages. De Chant v. Monarch Life Ins. Co., 200

Wis.2d 559, 577, 547 N.W.2d 592 (1996). Although the

Munros did not include in their complaint a figure for

attorney fees, it was certified in their supplemental brief

that $3,330.00 in fees had accrued by that point. These two

figures add up to $7,215.01. Both parties rely then on a

substantial award of punitive damages to put them over the

jurisdictional hump.

We are unconvinced that the amount in controversy exceeds $75,000. Even if we were to accept as accurate the

parties’ total compensatory damages figure of $7,215.01, the

punitive damages award would need to be more than ten

times that amount to meet the statutory threshold. The

Supreme Court, however, has set constitutional limits on

the punitive damages multiplier in simple economic-loss

cases, such as nonpayment of insurance. State Farm Mut.

Auto Ins. Co. v. Campbell, 538 U.S. 408, 410 (2003) (noting,

“few awards exceeding a single-digit ratio between punitive
No. 04-1396 3

and compensatory damages, to a significant degree, will

satisfy due process”). Neither party addresses this presumption against punitive damages that are a double-digit multiple of the compensatory injury. Golden Rule cites instead

Mathias v. Accor Lodging, Inc., 347 F.3d 672 (7th Cir. 2003),

for the proposition that an award of punitive damages can

exceed a single-digit multiplier of actual losses. But Golden

Rule misinterprets that decision. Mathias holds that punitive damages may be a large multiple of any one victim’s

loss when a defendant’s acts inflict small losses on hundreds

of people. Mathias, 347 F.3d at 676-77. Here, there was no

widespread injury.

In fact, there does not appear even to have been individual injury. Since the Munros never paid the contested bill,

their actual damages were not $3,885.01, but zero. Neither

side cites a decision for the proposition that Wisconsin state

law authorizes punitive damages when the insurer delays

in payment and the insured suffers no loss. Even when

attorney fees are taken into account, the Munros are

$71,670.00 short of the threshold for federal jurisdiction. To

find that subject matter jurisdiction exists would render

meaningless the amount-in-controversy rule. Therefore, the

judgment of the district court is VACATED, and we REMAND

with instructions to dismiss for lack of subject matter

jurisdiction.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—12-27-04