to justify dismissal.”* S¢.. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 289 (1938). In
the present case, however, Defendants sought to disrupt Plaintiff's initial choice of forum by removing
the case to federal court.. Defendants’ removal implicates the corollary of St. Paul Mercury: “a plaintiff
in state court may prevent removal by committing to accept less than the federal jurisdictional
minimum.” Jd. Thus, “the plaintiffs mastery of the complaint precludes the defendant from bringing
the case into federal court by saying that the plaintiff could have tried to obtain a larger recovery.”*
Shaw, 994 F.2d at 374. In the present case, although she could have asked the state court to both vacate
the arbitration award and remand the case to the arbitration panel for rehearing, Plaintiffrefrained from

seeking additional relief that might have led to a “larger recovery.” By refraining from seeking this
further relief, Plaintiff protected her right to remain in state court.

Although the Seventh Circuit has not addressed this issue, this result is consistent with precedent
from other circuits. In Ford v. Hamilton Invs., Inc., 29 F.3d 255 (6" Cir. 1994), the plaintiff, a former
employee of the defendant brokerage firm, brought suit in federal court seeking to vacate an earlier
arbitration award in favor of the defendant. Ford, 29 F.3d at 257. Both parties had asserted claims for
money damages in the arbitration proceeding, but the arbitration panel denied the plaintiffs claim in its
entirety and awarded the defendant $30,524.16. Jd. at 256-57. The plaintiff then petitioned a federal

district court to vacate the arbitration award, but the court denied the petition. /d. at 257. On appeal,

the Sixth Circuit considered sua sponte whether the district court had subject-matter jurisdiction over

In other words, when a plaintiff is trying to get into federal court, there is a strong presumption in
favor of “a plaintiff's allegation that more than the jurisdictional amount is at stake.” Erwin Chemerinsky,
Federal Jurisdiction 303 (3d ed. 1999). Cf, Barbers, Hairstyling For Men & Women, Inc. v. Bishop, 132
F.3d 1203, 1205 (7" Cir. 1997) (“[P]laintiff's evaluation of the stakes must be respected.”).

‘That the plaintiff is master of the complaint does not of course sanction the use of “artful pleading”
to avoid removal jurisdiction. See generally Charles Alan Wright, Law of Federal Courts 229-31 (5" ed.
1994).


CONCLUSION
Because Plaintiff petitioned the state court to vacate the previous arbitration award and did not
seek an order requiring the rehearing of her arbitration claim, the amount in controversy in this case is
limited to the $4,800 in forum fees assessed against her by the arbitration panel. This amount is
insufficient for this court to exercise diversity jurisdiction under 28 U.S.C. § 1332. Accordingly,

Plaintiff's motion to.remand this matter to the state court is granted. It is so ordered.

BO

Maltin E. ASPEN
United Sfates District Judge

Dated ja low


answer is less clear where, as here, the amount in controversy at the start of the arbitration proceeding
exceeds $75,000, but the actual arbitration award falls below this level.

Defendants argue that in an action to vacate an earlier arbitration award, the amount in
controversy is the amount originally sought in the previous arbitration, regardless of whether the actual
award exceeds $75,000... Defendants cite three cases for this proposition, only one of which warrants
discussion.? In Hough y. Merrill Lynch, Pierce, Fenner & Smith, Inc., 757 F.Supp. 283 (S.D.N.Y. 1991),
plaintiffs petitioned the district court to either modify an earlier arbitration award or set aside the award
and remand the matter for rehearing. Jd. at 285. In the arbitration proceeding, the plaintiffs had
requested a total judgment of more than $3 million, but the arbitration panel awarded them only $17,500.
Id, at 285-86. In determining the amount in controversy, the district court reasoned: “As this is, in part,
a motion to vacate the arbitration award and to remand for rehearing, the Court will look to the possible
award that might result from the desired rehearing.” Jd. Since the defendant’s risk at a rehearing would
be more than $3 million, the district court held that the amount-in-controversy requirement was satisfied
and exercised diversity jurisdiction.

Hough, however, is distinguishable from the case at bar in two important respects. First, the
plaintiffs in Hough petitioned the court to vacate the award and to remand the matter for rehearing. In
the present case, Plaintiff did not seek an order from the state court requiring another arbitration hearing.
Second, the plaintiffs in Hough brought their suit in federal court and thus benefitted from the rule

requiring courts to find “to a legal certainty that the claim is really for less than the jurisdictional amount

*Defendants.cite Bull HN Info. Systems, Inc. v. Hutson, 229 F.3d 321 (1" Cir. 2000), where the First
Circuit noted but did not resolve this issue. See id. at 329. Defendants also cite Giangrande v. Shearson
Lehman/E.F. Hutton, 803.F.Supp. 464 (D.Mass. 1992), but in that case the district court did not reach this
issue because the amount sought in the underlying arbitration fell below the amount-in-controversy
requirement. See id. at 465, 468.


the plaintiff's claimi. Jd. at 258. In determining whether diversity jurisdiction existed, the court noted
that although the plaintiff claimed more than $50,0008 against the defendant in the underlying
arbitration, he never asked the district court to order the arbitrators to reopen his claim. /d. at 260.
Rather, the plaintiff simply petitioned the district court to vacate “an award that fell short of the
jurisdictional amount by almost $20,000.” Jd. The court held that “{a] claim for vacation ofan arbitral
award in the amount of $50,000 or less is not sufficient for diversity jurisdiction.” Jd.

The Eleventh Circuit reached a similar result in Baltin v. Alaron Trading Corp., 128 F.3d 1466
(11" Cir. 1997), In that case, an investment brokerage house initiated an arbitration proceeding against
two investors for damages arising from one of their trading orders. Jd. at 1467-68. The brokerage house
sought $19,921.36 in actual damages and $50,000.00 in punitive damages. Jd. at 1468. The arbitration
panel found in favor of the brokerage house and awarded it $36,248.69 in damages. Jd. The investors
then filed suit in federal district court to “vacate, modify, or correct the award pursuant to the Federal
Arbitration Act.” Jd. The Eleventh Circuit held, inter alia, that the district court did not have diversity
jurisdiction over the investors’ claim. Jd. 1472. The court noted that “[t]he maximum remedy sought
by the [investors] was the vacatur of the arbitration award of $36,284.69.” Jd. “The [investors] did not
request an award modification that would provide the [investors] with money. Instead, the [investors]
sought merely to reduce or eliminate the arbitration award against them.” Jd. at 1472 n.16 (emphasis
in original).

Finally, in Goodman v. CIBC Oppenheimer & Co., 131 F.Supp.2d 1180 (C.D.Cal. 2001), the
plaintiff brought a securities fraud claim before a National Association of Securities Dealers (“NASD”)
arbitration panel. Jd. at 1181-82. The plaintiff initially sought $3,000,000 in damages, but the NASD

arbitration panel awarded him $74,030.75. Jd. at 1182. He then petitioned a federal district court to

SAt that time, Section 1332 required that the amount in controversy exceed only $50,000.

5


Minute Order Fagen (06/97)

. J United States District Court, Northern District of Illinois
va

‘ Sitting Judge if Oth
Marvin Aspen than Assigned Judge
02 C 970 DATE 5/17/2002

Sara Sirotzky vs. The New York Stock Exchange,etal

{in the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

a

MOTION: of the motion being presented.]
DOCKET ENTRY: .
(1) Qo Filed motion of [ use listing in “Motion” box above.]
(2) oO Brief in support of motion due
(3) Oo Answer brief to motion due. . Reply to answer brief due.
(4) O Ruling/Hearing on__set for__at
(5) QO Status hearing[held/continued to] [set for/re-set for] on setfor at
(6) oO Pretrial conference{held/continued to] [set for/re-set for] on setfor_ ss at_—
(7) Oo Trial[set for/re-set for] on_____at
(8) o [Bench/Jury trial] [Hearing] held/continued to__ at
(9) QO This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) O General Rule21 OFRCP41(a)(1) [1 FRCP41(a)(2).
qo) (Other docket entry) Enter Memorandum Opinion and Order: Because plaintiff petitioned the state court

to vacate the previous arbitration award and did not seek an order requiring the rehearing of her arbitration claim,
the amount in controversy in this case is limited to the $4,800 in forum fees assessed against her by the arbitration
panel. This amount is ‘insufficient for this court to exercise diversity jurisdiction under 28 USC §1332.
Accordingly, plaintiff's. motion to remand (11-1) this matter to the state court is granted. The ruling date of
5/23/02 is stricken. Any other pending motions are moot. The Clerk of the Court is directed to remand the above
cause of action to. the Circuit Court of Cook County, Illinois.

[For firth

il see order attached to the original minute order.]

No notices required, advised in open court.
No notices required.

Notices mailed by judge’s staff.

Notified counsel by telephone.

Docketing to mail notices.

Mail AO 450 form.

Copy to judge/magistrate judge.

courtroom

GL deputy's

number of notices

Document
Number

MAY 20 ano9

date docl

Tocketingydputy initials

sno

date mailed abt)

GL

initials

‘Dateltime received in.

central Clerk's Office

mailing deputy initials



astern

vacate the NASD arbitration panel award under the Federal Arbitration Act, 9 U.S.C. § 10, alleging that
the arbitrators manifestly disregarded the law. Id. The district court dismissed the suit for lack of
subject-matter jurisdiction, holding that “(t]he amount in controversy is equal to the arbitration award
regardless of the amount sought in the underlying arbitration.” Id. at 1184 (emphasis added) (citing
Baltin, 128 F.3d at 1466; Ford, 29 F.3d at 225 (6" Cir. 1994)). See also Mannesmann Dematic Corp.
v. Phillips, Getschow Co., No. Civ.A. 3:00-CV-2324-G, 2001 WL 282796 (N.D.Tex. March 16, 2001)
(citing Baltin, Ford, and.Goodman in denying subject matter jurisdiction over vacatur action where
amount sought in original proceeding exceeded $75,000 but actual award was only $64,035).

Under Ford, Baltin, and Goodman, the amount-in-controversy requirement is not satisfied when
a plaintiff, petitions a federal court to vacate an arbitration award of less than $75,000, at least where the
plaintiff refrains from seeking a rehearing to pursue a previously-arbitrated claim in excess of $75,000.
Although Hough might support a different result where the plaintiff also petitions the court to remand
the matter for rehearing, see Hough, 757 F.Supp. at 285-86, Plaintiff did not seek a remand in this case.
Where a party merely seeks to vacate an earlier arbitration award, “the amount in controversy is equal
to the arbitration award regardless of the amount sought in the underlying arbitration.” Goodman, 131
F.Supp.2d at 1184 (emphasis added). Thus, the amount in controversy in this case is limited to the
$4,800 in forum fees that the arbitration panel assessed against Plaintiff, for avoiding payment of this
amount is the only “pecuniary result” that Plaintiff's requested relief would directly produce. See
McCarty, 595 F.2d at 394. As such, Plaintiff could not have brought her claim initially in federal court
because the amount in controversy did not rise to the level required to invoke diversity jurisdiction.

Therefore, Defendants are not entitled to remove this case to federal court.


UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
SARA SIROTZKY, )
)
Plaintiff, )
)
)
v. ) No. 02 € 0970
)
. )
THE NEW YORK STOCK EXCHANGE and )
SANFORD C. BERNSTEIN AND CO., INC. )
)
Defendants. )

__... MEMORANDUM OPINION AND ORDER
MARVIN E. ASPEN, Chief Judge:

Plaintiff Sara Sirotzky sought a declaratory judgment in Illinois state court against Defendants
Sanford C. Bernstein & Co. (“Bernstein”) and the New York Stock Exchange (“NYSE”). Defendants
removed the case to federal court. Presently before us is Plaintiff's motion to remand the case to the
state court. For the reasons set forth below, the motion is granted.

BACKGROUND

Sirotzky initiated_an arbitration proceeding pursuant to NYSE rules against Bernstein, her
investment adviser, for the recovery of “substantial losses” allegedly caused by Bernstein’s negligent
investment advice. Sirotzky sought $241,858 in compensatory damages, but the arbitration panel ruled
in favor of Bernstein and assessed forum fees against Sirotzky in the amount of $4,800. Sirotzky then

filed suit in INinois state court, seeking a declaratory judgment vacating the arbitration panel’s decision

on the grounds that Bernstein’s counsel was not licensed to practice law in Illinois. Defendants removed


the case to federal court, claiming diversity jurisdiction under 28 U.S.C. § 1332. Sirotzky filed this
motion to remand, arguing that her case does not satisfy the amount-in-controversy requirement of
Section 1332,

DISCUSSION

A defendant is entitled to remove a case only if the plaintiff could have brought her claim
initially in federal court. Shaw v. Dow Brands, Inc., 994 F.2d 364, 366 (7" Cir. 1993). Defendants argue
that Plaintiff could have brought her claim in federal court because there is complete diversity of
citizenship’ and the amount in controversy exceeds $75,000. See 28 U.S.C. § 1332(a) (defining
requirements for diversity jurisdiction). Plaintiff maintains, however, that the amount in controversy
does not exceed $75,000,

In a typical removal action, a federal court simply looks to the plaintiff's state court complaint
to determine the amount in controversy. Shaw, 994 F.2d at 365. In this case, however, Plaintiff's state
court complaint did not state an amount in controversy. Instead, Plaintiff's complaint sought only
declaratory relief. In actions seeking declaratory or injunctive relief, “the amount in controversy is
measured by the value of the object of the litigation.” Hunt v. Washington State Apple Adver. Comm’n,
432 U.S. 333, 347 (1977). In determining this value, a court simply looks to “the pecuniary result to
either party which the judgment would directly produce.” McCarty v. Amoco Pipeline Co., 595 F.2d
389, 395 (7" Cir. 1979).

The question before us, then, is what pecuniary value to place on a declaratory judgment action
seeking to vacate an arbitration decision. When a party seeks to vacate an arbitration decision and the

underlying award exceeds $75,000, the amount-in-controversy requirement is clearly satisfied. But the

‘Plaintiff does not dispute that there is complete diversity of citizenship in this case. Sirotzky is a
citizen of Illinois, the NYSE is a citizen of New York, and Bernstein is a citizen of Delaware and New York.

2