In Rose v. Paetec Communications, Inc., 12-CV-509(January 31, 2013), the US District Court for the Northern District of Oklahoma addressed how an employer in an employment dispute may establish the amount in controversy for purposes of removing a case on diversity grounds when the initial pleading fails to do so. In Rose, the plaintiff brought suit in state court alleging state law discrimination claims following the termination of his employment and sought unspecified damages which he claimed were less than $75,000. Later, in response to the defendant’s discovery requests, which sought specific information about the plaintiff’s damages, the plaintiff itemized his claimed damages, which totaled approximately $60,000. In his responses, the plaintiff also alleged entitlement to reinstatement to his former position with the defendant as part of his requested relief.
Within 30 days of receiving the plaintiff’s discovery responses, the defendant removed the case to federal court on diversity grounds, claiming that the amount in controversy exceeded $75,000. The defendant asserted that the damages the plaintiff specified in his discovery responses of approximately $60,000, when combined with the annual cost to the defendant to reinstate the plaintiff to his former position (approximately $39,000), caused the amount in controversy to exceed the $75,000 threshold for diversity jurisdiction purposes.
The plaintiff moved to remand on two grounds. First, the plaintiff claimed that the defendant could not use the potential cost of reinstatement to establish the amount in controversy. The court rejected this argument, finding that the value of “nonmonetary relief” is an appropriate consideration in determining the amount in controversy and that the cost of reinstatement was properly considered as nonmonetary relief. Second, the plaintiff claimed that the defendant’s removal notice was untimely, as it was filed more than 30 days after the plaintiff filed his petition in state court. The court also rejected this argument, finding that the petition did not set forth the amount of damages or relief sought with any specificity. Accordingly, the defendant had no basis to determine that the amount in controversy reached $75,000 at that time.
The court found that it was only after the plaintiff responded to discovery and identified specific items and amounts of damages, and set forth his request for reinstatement, that the defendant had sufficient information to allow it to determine the amount in controversy. Within 30 days after receipt of those responses, the defendant filed its notice of removal, and provided an affidavit establishing the cost of reinstatement, thus demonstrating that the amount in controversy exceeded $75,000. Accordingly, removal was timely.
The takeaway is that in considering removal of a diversity case, the initial pleading may not provide a sufficient basis for removal. However, the defendant should serve discovery requests promptly to seek specific information on damages and other relief sought, and if necessary should take other steps to establish the full measure of relief sought (including seeking a settlement demand or taking the plaintiff’s deposition). Once the information is obtained, it may provide a basis for removal even if the initial pleading did not establish such a basis.