Opinion ID: 4542780
Heading Depth: 2
Heading Rank: 1

Heading: Revisiting Jurisdiction

Text: The general rule to assess whether the amount in controversy exceeds the threshold for federal diversity jurisdiction is that “the sum claimed by the plaintiff controls if the claim is apparently made in good faith.” St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288 (1938) (footnote omitted). To warrant dismissal, then, “[i]t must appear to a legal certainty that the claim is really for less than the jurisdictional amount,” although “[e]vents occurring subsequent to the institution of suit which reduce the amount recoverable below the statutory limit do not oust jurisdiction.” Id. at 289–90. Put differently, federal courts are not divested of jurisdiction simply because a valid defense exists, the district court’s rulings have reduced the amount recoverable or the plaintiff is otherwise unable to recover an amount sufficient to support jurisdiction. Id. at 289, 292. But see Stevenson v. Severs, 158 F.3d 1332, 1334 (D.C. Cir. 1998) (per curiam) 10 (noting that when the claim on which original jurisdiction has vested is dismissed, the district court may exercise discretion in deciding whether to keep the remaining claims based on its authority under 28 U.S.C. § 1367(c)(3)). From this, the Professors argue that their place in federal court was cemented in 2017 when the district court concluded it was “far from legally certain that [they] could not recover over $75,000.” Bronner I, 249 F. Supp. 3d at 38. As they see it, the district court erred when, nearly two years later, it found “to a legal certainty” that the Professors could not in fact satisfy the amount-in-controversy requirement. Bronner IV, 364 F. Supp. 3d at 17. And because dismissal was predicated on their “lack [of] standing to seek damages arising from ASA’s alleged injuries,” id., the Professors contend this “ruling[] of the district court” that “reduce[d] the amount recoverable below the jurisdictional requirement,” St. Paul Mercury, 303 U.S. at 292, is a subsequent event incapable of divesting jurisdiction, see id. at 289–90. They also identify numerous purported errors in the district court’s application of St. Paul Mercury’s “legal certainty” standard. As an initial matter, we address the Professors’ argument that the district court improperly reassessed jurisdiction in light of the allegations contained in the second amended complaint. They invoke the principle that “[t]he amount in controversy for federal diversity jurisdiction purposes is determined as of the time the action is commenced,” Worthams v. Atlanta Life Ins. Co., 533 F.2d 994, 997 (6th Cir. 1976), which reflects St. Paul Mercury’s concern that jurisdiction, once properly acquired, should not depend on whether the plaintiff is ultimately entitled to the jurisdictional amount, cf. Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 830 (1989) (“The existence of federal jurisdiction ordinarily depends on the facts as they exist when the complaint is filed.”). It makes sense to focus on the 11 claims set out in the complaint, instead of the plaintiff’s actual recovery; “[o]therwise every diversity case that a plaintiff lost on the merits would be dismissed for lack of federal jurisdiction, allowing the plaintiff to start over in state court.” Herremans v. Carrera Designs, Inc., 157 F.3d 1118, 1121 (7th Cir. 1998). But there are different concerns implicated by the filing of an amended complaint and the Professors’ position runs headlong into the Supreme Court’s more recent direction that “when a plaintiff files a complaint in federal court and then voluntarily amends the complaint, courts look to the amended complaint to determine jurisdiction.” Rockwell Int’l Corp. v. United States, 549 U.S. 457, 473–74 (2007). It is true, as the Professors point out, that Rockwell did not involve an amountin-controversy dispute. But they cite no authority to support their claim that this distinction necessarily cabins Rockwell’s reach and, in fact, they appear to have conceded Rockwell’s applicability here. See Oral Arg. at 1:58 (“Our amended complaint is the complaint we’re talking about.”). Moreover, St. Paul Mercury was a removal case, which “raise[s] forum-manipulation concerns that simply do not exist when it is the plaintiff who chooses a federal forum.” Rockwell, 549 U.S. at 474 n.6. The worry that a plaintiff will attempt to “prevent removal[] by forswearing any effort to collect more than the jurisdictional threshold” does not obtain in that circumstance. Back Doctors Ltd. v. Metro. Prop. & Cas. Ins. Co., 637 F.3d 827, 830 (7th Cir. 2011) (citing, inter alia, St. Paul Mercury, 303 U.S. at 291). At the same time, when a suit is instituted in state court, “[t]here is a strong presumption that the plaintiff has not claimed a large amount in order to confer jurisdiction on a federal court.” St. Paul Mercury, 303 U.S. at 290. Taken together, these considerations counsel that in a removal case we look to the plaintiff’s original complaint, not 12 post-removal amendments. But for a case like this one, “filed originally in federal court,” normal jurisdictional “principles generally function as expected.” In Touch Concepts, Inc. v. Cellco P’ship, 788 F.3d 98, 101 (2d Cir. 2015); see also Boelens v. Redman Homes, Inc., 759 F.2d 504, 507–08 (5th Cir. 1985) (forum-manipulation concerns “are not present” when “the plaintiff, rather than the defendant, is invoking the jurisdiction of the federal court[,] . . . because the burden is on the plaintiff to establish jurisdiction in the first instance . . . .”). We therefore affirm that, under Rockwell, it was not error for the district court to revisit the amount in controversy based on the second amended complaint. The Professors nevertheless assert that the good-faith sum claimed in the second amended complaint established federal jurisdiction. Indeed, the district court initially said as much. After the second amended complaint was filed, the court concluded, “at th[at] stage, it [wa]s legally possible that [the Professors] could recover more than $75,000 if they prevail.” Bronner III, 317 F. Supp. 3d at 289. At the same time, however, the court acknowledged that if the Professors could not in fact recover damages from the individual defendants—an unanswered question at that point—“it would be legally impossible for [them] to recover $75,000.” Id. The court’s approach—temporarily affirming jurisdiction while simultaneously identifying potential defects for future resolution—caused it and the parties to “dance[] around the key issue . . . for multiple rounds of briefing and opinions.” Bronner IV, 364 F. Supp. 3d at 17. Although we may disagree that the extended inquiry evinced the smooth coordination of a “waltz . . . reach[ing] its crescendo,” id., we find no error in the decision to prolong adjudication of this threshold question. As we stated over forty years ago, “the district court may question at any time whether the jurisdictional amount has been shown.” King v. Morton, 520 F.2d 1140, 1145 (D.C. Cir. 1975) (citing 13 McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936)); see also Arbaugh v. Y & H Corp., 546 U.S. 500, 506 (2006) (“The objection that a federal court lacks subject-matter jurisdiction may be raised by a party, or by a court on its own initiative, at any stage in the litigation, even after trial and the entry of judgment.” (citation omitted)). Even so, the Professors argue that the district court’s volte face in its tentative jurisdictional assessment reflects an erroneous application of St. Paul Mercury’s legal certainty standard. They assert that once the amount-in-controversy requirement has been deemed fulfilled, the district court must “find that the legal certainty test is satisfied and that the plaintiffs’ allegations in the complaint were made in bad faith” before dismissing the action for failure to exceed the $75,000 jurisdictional threshold. Professors’ Reply Br. 8. And, because their allegations were not made in bad faith, they contend the district court was foreclosed from overruling its earlier amountin-controversy determination. The Professors’ position stretches St. Paul Mercury too far. Although St. Paul Mercury’s “primary concern” may be “the plaintiff’s ‘good faith’ in alleging the amount in controversy,” Coventry Sewage Assocs. v. Dworkin Realty Co., 71 F.3d 1, 6 (1st Cir. 1995), the opinion also makes clear that 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, . . . the suit will be dismissed, St. Paul Mercury, 303 U.S. at 289. This “latter passage appears to render irrelevant whether the plaintiff exercised good faith in pleading entitlement to recover the jurisdictional amount 14 when it is clear ‘to a legal certainty’ that he cannot recover a sufficient amount.” Esquilin-Mendoza v. Don King Prods., Inc., 638 F.3d 1, 4 (1st Cir. 2011). That is, “legal certainty . . . trumps the plaintiff’s good faith.” Id. (citation and internal quotation marks omitted). So even if the legal certainty test is intended to assess the plaintiff’s “good faith in choosing the federal forum,” St. Paul Mercury, 303 U.S. at 290; cf. Jones v. Landry, 387 F.2d 102, 104 (5th Cir. 1967) (“[G]ood faith and legal certainty are equivalents rather than two separate tests.”), it adds an objective element to this inquiry, see Tongkook Am., Inc. v. Shipton Sportswear Co., 14 F.3d 781, 785 (2d Cir. 1994). Put differently, “jurisdiction is defeated notwithstanding the plaintiff’s good faith . . . if one familiar with the applicable law could not reasonably have concluded that the claim was worth the jurisdictional amount.” EsquilinMendoza, 638 F.3d at 4. Relying solely on subjective good faith, as the Professors urge, would undercut the Supreme Court’s instruction that good faith “is open to challenge . . . by the facts disclosed at trial” so that, if “it is clear . . . [the] claim never could have amounted to the sum necessary to give jurisdiction[,] there is no injustice in dismissing the suit.”9 St. Paul Mercury, 303 U.S. at 290; see Tongkook, 14 F.3d at 785 (“[W]hile [the plaintiff]’s subjective ‘good faith’ is one of the factors to assess in determining subject-matter jurisdiction, ‘good faith’ alone does not control where it is apparent that, ‘to a legal certainty,’ [the plaintiff] could not recover the requisite 9 This language further supports our conclusion that the district court properly revisited its initial jurisdictional determination. In St. Paul Mercury, the Supreme Court held that dismissal is warranted if “it is apparent, to a legal certainty, that the plaintiff cannot recover the amount claimed,” not only “from the face of the pleadings” but also “from the proofs.” 303 U.S. at 289. If, as the Professors contend, the district court was precluded from reassessing subject-matter jurisdiction in light of concerns identified during the course of litigation, this instruction would be rendered toothless. 15 jurisdictional amount . . . .”). We therefore decline to adopt their more restrictive articulation. Setting aside, then, the Professors’ subjective good faith, it is well accepted that the legal certainty test is satisfied “when a specific rule of substantive law or measure of damages limits the amount of money recoverable by the plaintiff to less than the necessary number of dollars to satisfy the requirement.” 14AA CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 3713 (4th ed. 2011). Although the Professors contend “there must be a statute that explicitly limits the amount available,” Professors’ Reply Br. 7, and that “the legal certainty test is almost never (if ever) satisfied where there are one or more tort claims,” id. at 8, the case law does not corroborate their unsupported assertions. In Esquilin-Mendoza, for example, the First Circuit dismissed the plaintiff’s tort action for lack of subject-matter jurisdiction because, despite her good faith in claiming approximately one million dollars in damages, “she ha[d] no legal entitlement to recover damages for any emotional or other injury caused by” the defendant. 638 F.3d at 2, 5. And her one plausible claim, relating to the defendant’s delay in returning her vehicle, could not support a damages award even close to approaching the $75,000 threshold. Id. at 6. To be clear, the issue is not whether the plaintiff is victorious once the dust settles. Success (or lack thereof) on the merits is not the linchpin of federal diversity jurisdiction. Cf. Nightingale Home Healthcare, Inc. v. Anodyne Therapy, LLC, 589 F.3d 881, 886 (7th Cir. 2009) (“The failure [to prove damages] is a failure on the merits rather than a failure of jurisdiction.”). Instead, the concern is that the exercise of jurisdiction was erroneous in the first instance inasmuch as “the plaintiff never was entitled to recover” the requisite amount in controversy. St. Paul Mercury, 303 U.S. at 289 (emphasis 16 added); see also, e.g., Charvat v. GVN Mich., Inc., 561 F.3d 623, 628 (6th Cir. 2009) (“It appears to a legal certainty that ‘[a] claim is less than the jurisdictional amount where the applicable [] law bar[s] the type of damages sought by plaintiff.’” (alterations in original) (quoting Rosen v. Chrysler Corp., 205 F.3d 918, 921 (6th Cir. 2000) (quotation marks omitted))); McQueen v. Woodstream Corp., 672 F. Supp. 2d 84, 88 (D.D.C. 2009) (“If it becomes apparent during the course of litigation that from the outset the maximum conceivable amount in controversy was less than the jurisdictional minimum, the court must dismiss the case for lack of subject matter jurisdiction.”). Here, the district court held that the relevant substantive law precluded the Professors from obtaining relief on the ASA’s behalf, see Bronner IV, 364 F. Supp. 3d at 20 (Professors “do not, and cannot, bring a derivative action . . . under District of Columbia law” and “failed to identify any other District of Columbia cause of action by which they can assert ASA’s claims”), and, thus, it was “a legal certainty that [they] cannot collect the damages they claim ASA is owed,” id. at 21. The Professors point once again to the district court’s initial determination of jurisdictional sufficiency and construe this later ruling as a subsequent event incapable of divesting jurisdiction. Their argument relies on a distinction some courts have made “between subsequent events that change the amount in controversy”—which do not oust jurisdiction—“and subsequent revelations that, in fact, the required amount was or was not in controversy at the commencement of the action”— which do. Jones v. Knox Expl. Corp., 2 F.3d 181, 183 (6th Cir. 1993) We need not travel far down that road, however. The district court’s ruling was just as correct when the suit commenced, notwithstanding it was rendered three years later. The lack of subject-matter jurisdiction, then, is not attributable 17 to the dismissal of claims during the course of litigation nor is it the product of changed circumstances “disclosed by an amended complaint, by application of a legal defense following discovery, or by evidence adduced at a trial.” Id. Rather, it stems from the conclusion that the Professors never were entitled to collect certain damages. Cf. id. (“Since no subsequent event occurred to reduce the amount in controversy, this can only mean that the plaintiffs’ claims never satisfied the jurisdictional requirement.”). By answering a question that existed at the outset, the court’s “ruling thus confirmed what had been apparent earlier: [the Professors’] attempt to meet the jurisdictional minimum was in vain from the beginning.” Spielman, 251 F.3d at 6; see Jones, 2 F.3d at 183 (“[L]ack of the jurisdictional amount from the outset— although not recognized until later—is not a subsequent change that can be ignored.” (quoting 1 JAMES WM. MOORE ET AL., MOORE’S FEDERAL PRACTICE ¶ 0.92[1] (2d ed. 1993))). Accordingly, the district court did not err in applying St. Paul Mercury’s legal certainty test after initially finding the amountin-controversy requirement satisfied. Because the district court properly revisited its jurisdiction, we proceed to address its finding that the Professors’ “remaining claims do not raise an amount-in-controversy exceeding $75,000.” Bronner IV, 364 F. Supp. 3d at 22.