Court Opinion

ID: 2994899
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:17:17.47343+00
Date Added: 2024-06-11T09:32:31.065612
License: Public Domain

In the
United States Court of Appeals
For the Seventh Circuit

No. 00-4267

In re Brand Name Prescription Drugs
Antitrust Litigation.

Appeal of:    William Mack Price, et al.

Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 94 C 897, MDL No. 997--Charles P. Kocoras, Judge.

Submitted March 29, 2001--Decided April 23, 2001

 Before Bauer, Posner, and Easterbrook, Circuit Judges.

 Posner, Circuit Judge. This appeal brings before
us a recurring problem in the administration of
the diversity jurisdiction of the federal courts.
A plaintiff brings a suit in a state court. The
defendant removes it to federal court. To keep
the case from being remanded to the state court,
the defendant must show not only that the parties
are of diverse citizenship, ordinarily a
straightforward thing to show, but also that the
amount in controversy exceeds the jurisdictional
minimum, which is now $75,000 though it was only
$50,000 when the suit was brought. 28 U.S.C. sec.
1332. Since the plaintiff will not have had to
allege an amount in controversy when he filed his
suit in state court (or, if there is a minimum
amount in controversy for suing in that court,
invariably it will be substantially lower than
the federal minimum), and since his stakes in the
litigation are likely to be better known to him
than to the defendant, there is a risk that the
plaintiff will not contest jurisdiction upon
removal, but later, should the case turn against
him on the merits, will claim that the federal
minimum amount in controversy has not in fact
been met. In Shaw v. Dow Brands, Inc., 994 F.2d
364 (7th Cir. 1993), on which the defendants
heavily rely, we suggested that this kind of
sandbagging tactic could be defeated by deeming
the plaintiff’s failure to contest removal on the
ground that the stakes were not great enough to
satisfy the jurisdictional minimum a forfeiture
of any subsequent challenge to jurisdiction. The
plaintiffs in this case ask us to reexamine Shaw
in light of the bedrock, the unquestioned,
principle, enforced by us after Shaw in a case
that like the present one involved the removal of
an Alabama antitrust suit to federal district
court, In re Brand Name Prescription Drugs
Antitrust Litigation, 123 F.3d 599, 607-10 (7th
Cir. 1997) (we’ll cite this as "Huggins," that
being the name of the lead plaintiff in that
Alabama suit), that objections to subject-matter
jurisdiction cannot be waived, and are not
forfeited, until a case has gone through to final
judgment after exhaustion of all appellate
remedies.

 The present case began as a class action filed
in a state court in Alabama. A class of Alabama
consumers sought damages under the state’s
antitrust law against manufacturers of brand-name
prescription drugs, charging that they had
violated that law by colluding to raise the
prices of their drugs. The class members, though
they had not purchased the drugs directly from
the defendants, but rather from retailers,
claimed that the retail prices which they had
paid were inflated by the price-fixing
conspiracy, because the manufacturers’ increased
prices had been passed in whole or part down the
chain of distribution to the ultimate consumers.
If brought under federal antitrust law, such a
claim would be barred by Illinois Brick Co. v.
Illinois, 431 U.S. 720 (1977), which disallows
suits by indirect purchasers; but Alabama permits
such suits under its antitrust law.

 Although the complaint that the plaintiffs filed
in state court did not specify the amount of
damages sought, or otherwise suggest an amount in
controversy, the defendants removed the case to a
federal district court in Alabama, which in turn
transferred it to a federal district court in
Illinois. Seven months later, the plaintiffs
moved to remand the case to the Alabama state
court on the ground that the amount in
controversy was in fact less than $50,000. The
district court refused to do so, and proceeded to
enter judgment on the merits for the defendants
on the ground that Alabama antitrust law does not
regulate interstate commerce. (The drugs bought
by the plaintiffs had been shipped across state
lines.) The reach of that law had been unsettled
when we decided Huggins, but the defendants
persuaded the district judge that it had since
been resolved in their favor by Abbott
Laboratories v. Durrett, 746 So. 2d 316 (Ala.
1999).

 The defendants argue that the plaintiffs’ seven-
month delay in challenging federal jurisdiction
operates not as a waiver or forfeiture of their
right to make such a challenge--such an argument
would be frivolous, see, e.g., Walters v. Edgar,
163 F.3d 430, 433 (7th Cir. 1998), and cases
cited there--but as a factual admission, an
admission that, as a matter of fact, the
plaintiffs are seeking more than $50,000 in
damages. And it is true that factual admissions
that establish federal jurisdiction have the same
status as other factual admissions unless there
is reason to believe that the parties are
colluding to conceal the absence of jurisdiction.
Workman v. United Parcel Service, Inc., 234 F.3d
998, 999-1000 (7th Cir. 2000); Prizevoits v.
Indiana Bell Tel. Co., 76 F.3d 132, 134-35 (7th
Cir. 1996). Were that not the rule, there would
have to be an evidentiary hearing in every
federal case to determine whether the federal
court had jurisdiction. But the plaintiffs never
admitted anything concerning the size of the
stakes in this litigation. It may have been
reprehensible of them to delay as long as they
did to raise a jurisdictional objection, and it
may even (though this we need not decide either)
have been a sanctionable tactic, but assuming
federal jurisdiction where none exists is not a
permissible sanction for anything. Napoleon at
his coronation took the imperial crown out of the
hands of the Pope and crowned himself. Federal
judges do not have a similar prerogative. A court
that does not have jurisdiction cannot assume it,
however worthy the cause.

 Had the plaintiffs, before the removal of the
case to federal court, stipulated that they were
seeking less than $50,000, the court would have
been required to remand the case to state court
without further inquiry. It would have been plain
that the case was not within federal
jurisdiction. But the converse--that jurisdiction
can be assumed without further inquiry if the
plaintiffs stipulate that they are seeking more,
or don’t stipulate at all--does not follow.
Jurisdiction cannot be conferred by stipulation
or silence. For that matter, it cannot (with
immaterial exceptions) be destroyed by
stipulation after jurisdiction attaches. If the
plaintiffs’ original claim was worth more than
$50,000, removal was proper, the case was within
federal jurisdiction, and the plaintiffs could
not defeat that jurisdiction by scaling back
their claim.

 Shaw, though it contains language that sorts ill
with the principles that we have been expounding
(language we now disapprove), is distinguishable.
It was a personal injury suit in which the
plaintiff was suing for permanent damage to his
lungs. It is difficult to see how, if he
succeeded in proving his claim (and there was no
suggestion that it was spurious), he would be
entitled to less than $50,000 (the then
jurisdictional minimum in federal diversity
cases, as when the present case was filed). So
improbable was that hypothesis that we were not
required, merely on the basis of the plaintiff’s
belated and unsubstantiated assertion, to remand
for a factual inquiry. This case is quite
different. We must bear in mind that in a class
action at least one plaintiff must satisfy the
minimum amount in controversy all by himself;
that the plaintiffs are purchasers of drugs for
their own use; and that the damage period is only
two years. One of the named plaintiffs may have
incurred $50,000 in damages from being
overcharged for drugs over a two-year period, if
only because the Alabama antitrust statute
affixes a $500 penalty to every violation, as we
explained in Huggins. So even if the overcharge
was trivial, someone who over a two-year period
made 100 separate purchases of drugs the price of
which had been inflated by the defendants’ price
fixing would satisfy the jurisdictional minimum.
That is possible but of course not certain--
indeed sufficiently uncertain, just as in
Huggins, to require an evidentiary hearing before
the motion to remand could be denied. The
judgment of the district court is therefore
vacated and the case remanded to that court for
the hearing.

Vacated and Remanded.