Circuit noted that it had not decided the issue of whether a defendant’s settlement offer is
relevant in evaluating whether the amounts in controversy requirement is met. Because it was
unnecessary for the Court to resolve that issue in Chase, the issue was left unresolved in that case
and remains so through the present.

LR81.2 of the Local General Rules of the United States District Court for the Northern
District of Illinois (“Local Rules”) provides:

Where one or more defendants seek to remove an action from an Illinois state
court based upon diversity of citizenship, and where the complaint does not
contain an express ad damnum, as to at least one claim asserted by at least

one plaintiff, in an amount exceeding the jurisdictional amount in controversy,
exclusive of interest and costs, specified in 28 U.S.C §§ 1332 (the “jurisdictional
amount”) that is based on express allegations in that claim in conformity with
that ad damnum, the notice of removal shall include in addition to any other
matters required by law:

(1) a statement by each of the defendants previously served in the state court action that it
is his, her or its good faith belief that the amount in controversy exceeds the jurisdictional
amount; and

(2) with respect to at least one plaintiff in the Ilinois action, either ——

(A) a response by such plaintiff to an interrogatory or interrogatories (see TILS.Ct.
Rule 213) as to the amount in controversy, either (i) stating that the damages
actually sought by that plaintiff exceed the jurisdictional amounts or (ii) declining
to agree that the damage award to that plaintiff will in no event exceed the
jurisdictional amount; or

(B) an admission by such plaintiff in response to a request for admissions (see
IILS.Ct. Rule 216(a)), or a showing as to the deemed admission by such plaintiff
by reason of plaintiff’’s failure to serve a timely denial to such a request (see
IILS.Ct. Rule 216(c)), in either event conforming to the statement or declination to
agree described in subparagraph (2)(A) of this rule.

Receipt by the removing defendant or defendants of the response by a plaintiff
referred to in subparagraph (2)(A) or of the admission by a plaintiff referred to in
paragraph (2)(B), or the occurrence of the event giving rise to a deemed admission
by a plaintiff referred to in subparagraph (2)(B) shall constitute the receipt of a
“paper from which it may first be ascertained that the case is one which is or has
become removable” within the meaning of 28 U.S.C. §§1446(b). Where the
defendant or defendants do not include the statement required by paragraph (1) of


Conclusion
For the foregoing reasons, the defendant’s motion to transfer venue to the Federal

District of Arizona is granted.

Enter:

pad) bow

David H. Coar

United States District Judge

Dated: April 25, 2002


applied. As far as this court has been able to determine, this Circuit’s use of the term “reasonable
probability” in connection with jurisdiction had its source in a footnote in Shaw v. Dow Brands.
Inc., 994 F.2d 364 (7" Cir. 1993). At the time that Shaw was decided, district courts within the
Seventh Circuit had been applying different standards in determining whether a removing
defendant had established a sufficient basis for jurisdiction. Some district courts applied a
reasonable probability standard while others imposed a more exacting requirement. In resolving
the issue, the Seventh Circuit stated: “[W]e think the Supreme Court dictated the proper standard
[for establishing facts sufficient to invoke jurisdiction in a removal action] in McNutt v. General

Motors Acceptance Corp., 298 U.S. 178:

If his allegations of jurisdictional facts are challenged by his adversary
in an appropriate manner, he must support them by competent proof.

and where they are not so challenged, the court may still insist that

that the jurisdictional facts be established or the case be dismissed, and
for that purpose the court may demand that the party alleging jurisdiction
justify his allegations by a preponderance of evidence. We hold that the
test set forth in McNutt is satisfied if a defendant in a removal action can
show a reasonable probability that more than $50,000 is in controversy.

Shaw, 994 F.2d 364, fn 2. Applying the gloss from McNutt to the jurisdictional amount

question, “reasonable probability” means simply that the removing defendant must establish that
it is more likely true than not true that the amount in controversy will exceed $75,000. This
interpretation is derived by inserting the standard for establishing a fact by preponderance of the
evidence. Here the defendant has established that the complaint in the present action claims
injuries including permanent damage to plaintiff’s eye and that in the prior action, with identical
allegations, plaintiff admitted that he was seeking between $75,000 and $331,876 in

compensatory and punitive damages.


this rule, or do not comply with one of the alternatives described in paragraph (2)
of this rule, the action will be subject to remand to the state court for failure to
establish a basis of federal jurisdiction.

In Huntsman n v. Whitehouse, 1997 WL 548043, this court, relying on Chase, concluded

that Local Rule 3 (now Local Rule 81.2) was not the exclusive way in which the jurisdiction
amount could be established in a case removed from an Illinois court.

If the only question in this case was whether when a second action is commenced by a
complaint that is identical to the complaint in prior action, a defendant may rely on the plaintiff's
answer to an interrogatory in the prior action to establish the jurisdictional amount, the answer
should be yes. Here, the removing defendant relies on both an answer to an interrogatory and an
admission from the prior case. But the factual vista here is more granular. After the admission
(and before filing the second action), plaintiff made a settlement demand for substantially less
than $75,000 and told the defendant that if the plaintiff refiled in state court, he did not believe
that the case could be removed because the matter in controversy was less than $75,000.
Plaintiff suggests that under these circurnstances it would be unreasonable for Avon and this
court to rely on the admissions from the prior case. If LR 81.2 was the exclusive way of
establishing the amount, the motion to remand would be granted for Avon did not follow the
procedure outlined therein (propounding an interrogatory or request that would have established
the amount in controversy in this case), But this court has held in Huntsman that LR 81.2 is not
exclusive. Therefore, the question is whether Avon has established that it is reasonably probable
that the amount in controversy exceeds $75,000.

The term “reasonable probability” has not been precisely defined by the Seventh Circuit

in this context. The origin of the term, however, provides some guidance as to how it should be


purposes of evaluating the amount in controversy, but on the record before this court, there can
be no confidence that the demand approximates risk of loss or likelihood of gain.

Therefore, this court concludes that on the facts presented, the defendant Avon has met its
burden of reasonable probability that the jurisdictional amount has been established.
Accordingly, plaintiff’s motion to remand is denied.

Il. Motion to Transfer Venue

Plaintiff opposes a change of venue because he would prefer to litigate in Illinois and
Avon does business in this state. The facts support transferring this case to the District of
Arizona. The plaintiff lives in Arizona. He purchased the cream which caused him injury in
Arizona. He suffered the injury in Arizona. He received his medical treatment in Arizona.
While it is unclear whether all fo the witnesses are located in Arizona, but many of the witnesses
are there. m Other than the fact that the plaintiff's attorney is in Illinois, there appears to be no
reason why this case should not be transferred. The motion for change of venue is granted. The

clerk is directed to transfer this case to the District of Arizona.


‘Minute Order Form (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge David H. Coar Sitting Judge if Other
or Magistrate Judge ° than Assigned Judge
CASE NUMBER 02 C 146 DATE 4/25/2002
CASE Andrew J. Murphy vs. Avon Products, Inc.
TITLE
[In the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.)
DOCKET ENTRY:
qd) o Filed motion of [ use listing in “Motion” box above.]
(2) Oo Brief in support of motion due
(3) o Answer brief to motion due___. Reply to answer brief due.
(4) o Ruling/Hearing on set for at
(5) a Status hearing[held/continued to] [set for/re-set for] on set for at _
(6) a Pretrial conference[held/continued to] [set for/re-set for] on set for at :
(7) oO Trial[set for/re-set for] on at
(8) o [Bench/Jury trial] [Hearing] held/continued to at
(9) o This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) OO General Rule 21 C) FRCP4i(a)(1) C1 FRCP41(a)(2).
(0) =f [Other docket entry] _ For the reasons stated in the attached Memorandum Opinion and Order, the
defendant’s motion to transfer venue to the Federal Distri Arizona is granted. [Dac. #s 6, 12].
al @ (For further detail see order attached to the original minute order.]
No notices required, advised in open court. Document
. 7 Number
No notices required. umber atnoties
Notices mailed by judge’s staff. APR 3g
Notified counsel by telephone. date 0 2m
x Docketing to mail notices.
Mail AO 450 form, A als
| | ISDA ponte ey
Copy to judge/magistrate judge. . '
courtroom Gail uh ace g date mailed notice
vatle) deputy’s
initials -
i, Date/time received in
~“cential Clerk's Office railing deputy ictals



Although the plaintiff made a settlement demand for an amount substantially less than
$75,000, in the absence of some better explanation of why the settlement demand should fix the
amount rather than the plaintiff’s prior admissions, the court will rely on the admissions. In
general, settlement demands and offers represent a party’s evaluation of the outcome of a case
discounted by factors including risk and delay. The phrase “amount in controversy” suggests the
largest amount that the plaintiff may gain or the largest amount that the defendant may lose in
litigation. Settlement offers/demands are not inherently more predictive than ad damnum clauses
in ascertaining what the real risk of gain/loss is in a given case. At an early stage, the settlement
offers/demands are as likely to be influenced by negotiating stategy as by an honest belief as to
the possible outcome.

Suppose a plaintiff states: “I will take $50,000 to settle before the case goes to trial, but if
the case goes to trial, I will ask for $2,000,000.” In that example, if the demand set the “amount
in controversy”, the plaintiff would defeat removal, even though she might recover a multiple of
the jurisdictional amount at trial. For that reason, this court is unwilling to place very much
weight on a settlement demand/offer, without more. Putting aside the matter of litigation costs,
it may be argued that where a plaintiff makes a settlement demand, the amount of that demand
should establish the minimum “amount in controversy” because (as a matter of strategy) if the
plaintiff demands an amount that is too low, the defendant (assuming both sides have the same
information) will recognize the inadequacy of the demand and quickly accept it. It does not
follow, however, that a plaintiff's demand should establish the maximum (dollar amount) in
controversy because the plaintiff almost always maintains the ability to ask for more if the case

goes to trial. This court doubts whether settlement demands/offers should ever be used for


At the time of remand, the defendant knew that plaintiff had responded to discovery in
the prior action indicating that he was seeking between $75,000 and $331,876 on account of his
claims. Defendant knew that the claims being asserted in the instant case were the same as those
asserted in the prior case. Defendant also knew about the $45,000 settlement demand and the
$12,500 offer.

The party seeking to invoke federal diversity jurisdiction bears the burden of establishing

that the requirements of that jurisdiction are met. NLF, Inc. v. Devcom Mid-America, Inc., 46

F.3d 231, 237 (7" Cir. 1995); Jones v Gen’! Tire & Rubber Co., 544 F.2d 660, 664 (7" Cir,
1997). In Chase v. Shop n’ Save, 110 F.3d 424 (7" Cir. 1997), the Court decided the
requirements thusly:
A defendant meets this burden by supporting her allegations of jurisdiction
with competent proof, which in our circuit requires the defendant to offer

evidence which proves to a reasonable probability that jurisdiction exists.

Id. at 426 (internal citation omitted). As noted in Chase, the logical starting point in determining

the amount in controversy is what the plaintiff alleged in the complaint. That is a problem in
Illinois, where plaintiffs are prohibited from pleading an ad damnum in excess of the minimum
necessary to satisfy the jurisdictional requirements of the department of the state court in which
the action is brought. To address that problem, the Seventh Circuit has held that the district
courts in Illinois may look outside the pleadings to other evidence of jurisdictional amount.
Chase, 110 F.3d at 427. But in examining this “other” evidence the district court may only
consider evidence that was available at the moment the petition for removal was filed. See In re

Shell Oil Co., 970 F.3d 355, 356 (7" Cir. 1992)(per curiam).

What should the court make of the $45,000 settlement demand? In Chase, the Seventh



The plaintiff originally brought his claims at issue in this case in a complaint filed in the
Circuit Court of Cook County, Illinois, bearing Case No. 01 L 014999. That case was removed
to this court and transferred to the United States District Court for the District of Arizona where
it was dismissed on September 12, 2001 for want of prosecution. While that action was pending,
plaintiff stated (in answer to interrogatories) that he was seeking $331,876.00 in compensatory
and punitive damages. Moreover, in that prior action, plaintiff admitted (in requests for
admission) that he was seeking compensatory damages exceeding $75,000. Subsequently,
Murphy refiled his claims against Avon in the Circuit Court of Cook County. The allegations
and parties in the instant case are identical to these in the prior case.

In the instant action, defendant Avon again has moved to transfer venue to the District of
Arizona, Plaintiff objects to removal (which this court deems to be a motion to remand) and to
transfer of venue, Near the time that the prior case was dismissed in Arizona, plaintiff made a
settlement demand for $45,000. Shortly thereafter, defendant countered with an offer of $12,500.
Plaintiff denies that the amount in the in the instant action in controversy, is in excess of
$75,000.

Discussion
IL Motion to Remand

Plaintiff implies that the lower figure was derived after written discovery and two
depositions in Arizona. Presumably it is plaintiff’s position that, in light of that discovery, his
prior interrogatory answers and responses to request to admit have no further utility. In
plaintiff's motion to remand, he further states affirmatively that he will not seck damages greater

than $75,000 if this case is remanded to the Circuit Court of Cook County.


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

Andrew J. Murphy, )

) Pir

Plaintiff, ) Abo 8

. BPR §
.. ) No. 02 C 146 3 2099
) HONORABLE DAVID H. COAR

Avon Products, Inc., )
)
Defendant. )

MEMORANDUM OPINION AND ORDER

Before this court is plaintiff's, Andrew Murphy (“Murphy”) motion to remand this case to
the Circuit Court of Cook County, Illinois and defendant’s, Avon Products, Inc. (“Avon”) motion
to transfer venue of the instant action to the Federal District of Arizona. For the following
reasons, the defendant’s motion is granted.

Background

Murphy is a resident fo the state of Arizona, Avon is a New York corporation, with is
principal place of business in New York, New York.! Plaintiff claims injuries allegedly caused
when he purchased a moisturizing cream produced by Avon and applied it to his face. Some of

the cream came in contact with one of the plaintiff's eyes, causing permanent injury and pain.

‘In his complaint, plaintiff alleges that Avon’s principal place of business is in Cook
County, Illinois. In his “Answer” to Notice of Removal, plaintiff admits that Avon is a New
York corporation with its principal place of business in New York, New York, but “states
affirmatively that defendant Avon also has a place of business in Cook County, Hlinois. For the
purposes of this motion, this court finds that diversity has been established.

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