The opinion of the court was delivered by: Honorable Larry Alan Burns United States District Judge
On December 4, 2009, Defendants removed this action from the Chancery Court for Knox County, Tennessee to the U.S. District Court for the District of Tennessee. Plaintiff filed a motion to remand (the "Motion"). While the Motion was pending, the case was transferred by the Panel on Multidistrict Litigation to the U.S. District Court for the Southern District of California as part of In re: Musical Instruments and Equipment Antitrust Litigation, Docket number 09md2121. The case was stayed during this time and the Motion remained pending. On June 4, the Court issued an order setting a briefing schedule on the Motion. The Motion is now fully briefed and ready for disposition.
Defendants removed this putative class action, citing as the sole basis for jurisdiction the Class Action Fairness Act of 2005, and specifically the diversity provisions of 28 U.S.C. § 1332(d). The action is brought exclusively under Tennessee state law. Plaintiff is a resident of Kentucky and Defendants are citizens of New York, Delaware, and California. Although Plaintiff specifically disclaimed any recovery in excess of $74,999 per class member, and any recovery in excess of $4,999,999 for all claims, Defendants argue the amount in controversy is in fact met.
The Motion requests an award of attorney's fees under 28 U.S.C. § 1447 because, Plaintiff argues, Defendants lacked an objectively reasonable basis for removal.
The parties agree the Court should apply Ninth Circuit law in determining whether remand is required. The removal statute is strictly construed against removal jurisdiction, and any doubt must be resolved in favor of remand. Durham v. Lockheed Martin Corp., 445 F.3d 1247, 1252 (9th Cir. 2006). The removing party bears the burden of showing that this Court has jurisdiction, which includes showing the amount in controversy requirement is met. Gaus v. Miles, Inc., 980 F.2d 564, 567 (9th Cir. 1992).
If Plaintiffs have pleaded an amount in controversy less than the $5 million jurisdictional amount, Defendants must prove to a "legal certainty" that the amount in controversy exceeds that threshold. Lowdermilk v. U.S. Bank Nat'l Ass'n, 479 F.3d 994, 998 (9th Cir. 2007). If the face of the complaint does not plead a lesser amount, Defendants must show by a preponderance of evidence that the threshold is met. See Singer v. State Farm Mutual Auto Ins. Co., 116 F.3d 373, 375 (9th Cir. 1997); Behrazfar v. Unisys, 687 F. Supp. 2d 999, 1001 (C.D.Cal., 2009). If jurisdiction is lacking, the Court must immediately remand the case. Strasser v. KLM Royal Dutch Airlines, 631 F. Supp. 1254, 1258 (C.D.Cal. 1986).
Under CAFA, this Court can have jurisdiction only if the amount in controversy exceeds $5 million, exclusive of interest and costs. 28 U.S.C. § 1332(d)(2).*fn1
In his complaint, Plaintiff requests compensatory damages, interest, and declarations that Defendants have violated the law. In the "Jurisdiction and Venue" section of the complaint, Plaintiff also specifically and unambiguously disclaims recovery for any class member in excess of $74,999 and any recovery for the class as a whole in excess of $4,999,999:
The amount in controversy as to Plaintiff and each individual member of the Proposed Class does not exceed Seventy-Four Thousand Nine Hundred Ninety-Nine Dollars ($74,999.00) each, exclusive of interest and costs; and Plaintiff disclaims compensatory damages, punitive damages, declaratory, injunctive, equitable or other relief greater than Seventy-Four Thousand Nine Hundred Ninety-Nine Dollars ($74,999.00) per individual Class member. Further, Plaintiff and members of the Proposed Class limit their aggregate class-wide claims for relief to less than Four Million Nine Hundred Ninety-Nine Thousand Nine Hundred Ninety-Nine Dollars ($4,999,999.00) and specifically disclaim compensatory damages, punitive damages, disgorgement, declaratory, injunctive, equitable or other relief greater than Four Million Nine Hundred Ninety-Nine Thousand Nine Hundred Ninety-Nine Dollars ($4,999,999.00).
Complaint, ¶ 19. It is well established a Plaintiff may sue for less than the amount he is entitled to, in order to avoid federal jurisdiction and remain in state court. Lowdermilk, 479 F.3d at 998--99.
Because Plaintiff has said he seeks less than the jurisdictional amount, Lowdermilk would ordinarily require Defendants to demonstrate to a legal certainty that the jurisdictional threshold is met. Defendants, however, argue the complaint's allegations are ambiguous, and cite Guglielmino v. McKee Foods Corp., 506 F.3d 696 (9th Cir. 2007). Defendants read Guglielmino as holding that the "legal certainty" standard is not applied where allegations in the complaint appear to conflict with a disclaimer. Defendants argue the disclaimer is therefore ineffective, and urge the Court to apply the "preponderance" standard.
Defendants also point out that, as in Guglielmino, the disclaimer does not appear in the prayer for relief. This is an empty distinction, however.*fn2 Guglielmino does not stand for the proposition that a disclaimer to be effective must appear in the prayer for relief. Rather, it merely requires the complaint to be unambiguous as to the value of relief sought before the "legal certainty" standard will be applied. In Guglielmino, the complaint disclaimed most types of relief in excess of the jurisdictional amount but was silent as to other relief including attorney's fees and back payments of health ...