Diversity Jurisdiction: Amount in Controversy

Chavez v. JP Morgan Chase & Co., No. 16-55957 (9^th Cir., April 20, 2018) (J. Bybee)

AMOUNT IN CONTROVERSY FOR DIVERSITY JURISDICTION DETERMINATION IS NOT LIMITED TO DAMAGES INCURRED AT TIME OF REMOVAL BUT IS DETERMINED BY THE OPERATIVE COMPLAINT AT THE TIME OF REMOVAL AND DISCOVERY

Plaintiff brought a wrongful discharge claim in California state court against her employer alleging damages in her complaint to include “loss of earnings” and “loss of earning capacity,” as well as “medical expenses,” “reasonable attorneys' fees and costs,” “prejudgment interest,” “punitive and exemplary damages,” “a $750.00 penalty, pursuant to California Labor Code § 226(f),” and injunctive relief. The defendant removed the action to federal court which plaintiff did not initially contest. Ultimately the trial court granted defendant summary judgment on all counts. Plaintiff appealed claiming the Federal District Court lacked diversity jurisdiction because the damages she had sustained at the time of removal did not exceed the jurisdictional amount of $75,000.

 The ninth circuit found that in determining the amount in controversy in support of diversity jurisdiction the court should consider the damages alleged in the complaint at the time of removal as well as evidence that is part of the record in support of, or in opposition to a motion for summary judgment.  Here the court found the plaintiff had conceded the jurisdictional amount by not contesting the removal  initially, but independent of that found diversity based upon her deposition testimony that her  salary as a mortgage banker was greater than $39,000 a year and that she had intended to continue working for another nine years. Plaintiff further agreed that, if victorious, California  law could entitle her to over $350,000 in lost wages. The court rejected plaintiff's argument that diversity must be determined by the amount of damages actually incurred at the time of the removal. Rather past, present and prospective damages as alleged in the complaint and confirmed in discovery are the proper measure.