LOCAL FEDERAL JUDGES DISAGREE ON TIMING OF REMOVAL PETITIONS

July 9, 2004

Steven P. Garmisa
Hoey & Farina Attorney
garmisa@hoeyfarina.com
1-888-425-1212

In cases where Illinois tort claims are instantly yanked into federal court with the filing of removal petitions, federal judges ruling on remand motions disagree on an important question of timing.

With complaints that don't ask for a specific dollar amount but allege severe physical injuries, federal judges in the Northern District of Illinois disagree on whether compliance with a local rule is adequate to satisfy the deadline for removal or whether the 30-day period for removal starts running from the date the complaint is received.

Most of the judges have ruled that compliance with Local Rule 81.2(a) is sufficient to make sure a removal petition is filed on time. Disagreeing, Judge Rebecca R. Pallmeyer recently adopted the approach championed by Judge Ruben Castillo. Campbell v. Bayou Steel Corp., No. 03 C 8563 (N.D. Ill., May 20).

Ryan Campbell, an employee of Kindra Marine, was severely injured while unloading steel from a barge owned by Bayou Steel Corp.

The accident occurred in Chicago, and Campbell filed a tort claim against Bayou, plus one of its employees, Andrew Clay, in the Cook County Circuit Court's Law Division. The complaint declared that Campbell was seeking an amount in excess of the Law Division minimum, but it did not ask for a specific amount of damages.
Bayou Steel is a Delaware corporation that has its principal place of business in Chicago.

Exactly one year after Campbell filed the complaint, the defendants removed the case to the U.S. District Court for the Northern District of Illinois. Although both Campbell and Clay are citizens of Illinois, the defendants alleged that Clay was "fraudulently joined" as a defendant solely to defeat diversity jurisdiction.

However, several months before the defendants removed the case to federal court, Campbell submitted interrogatory answers disclosing that his left leg was amputated above the knee as a result of the accident.

With this record, Campbell moved to remand the case to state court. Here are some highlights of Pallmeyer's analysis granting the motion (with various omissions not noted in the quoted text):
"Removal of actions from state court to federal court is governed by 28 U.S.C. [sec]1441, which provides, 'any civil action brought in a state court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States.'

"The party seeking to invoke federal diversity jurisdiction bears the burden of demonstrating that the complete diversity and amount in controversy requirements were met at the time of removal. A defendant meets this burden by supporting his allegations of jurisdiction with 'competent proof,' i.e., 'evidence which proves to a reasonable probability that jurisdiction exists.'

"A defendant normally must file a notice of removal within 30 days after service of the complaint. 28 U.S.C. [sec]1446(b). If a case is not removable at the outset, a notice of removal may be filed within 30 days after the defendant receives 'a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable,' 28 U.S.C. [sec]1446(b).

"No case may be removed on the basis of diversity jurisdiction more than one year after commencement of the action, however. 28 U.S.C. [sec]1446(b).

"In some jurisdictions, plaintiffs are not required to or are actually prohibited from stating the amount of damages sought. In Illinois state courts, a personal-injury plaintiff may not specify exact damages in his complaint beyond the limit set by the local circuit court rule. 735 ILCS 5/2-604.

"This District Court has addressed this problem in Local Rule 81.2(a), which requires a removing defendant to file with its notice of removal: (1) a statement that the defendant in good faith believes that the amount in controversy exceeds the jurisdictional amount; and (2) a response by the plaintiff to an interrogatory or request for admission stating that the damages sought exceed $75,000. McCoy v. General Motors Corp., 226 F.Supp.2d 939, 941 (N.D. Ill. 2002) (Castillo, J.).

"The purpose of this rule was to provide 'a procedure for defendants faced with a complaint alleging a damages amount that satisfies the Illinois jurisdictional minimum but is below the federal jurisdictional amount in controversy.' Local Rule 81.2(a) is merely a guide to litigants in this district; it does not override section 1446(b)."
Bayou argued that it removed the case within 30 days of when it took Campbell's deposition, and that the deposition constituted the first "paper" providing notice that the case involved a claim for more than $75,000 in damages.

In a footnote, Pallmeyer explained:

"Defendants note that a majority of federal courts have held that a plaintiff's answers to deposition questions can constitute an 'other paper' for purposes of section 1446(b). See Peters v. Lincoln Electric Co., 285 F.3d 456, 465-66 (6th Cir. 2002) (collecting cases); but see Mill-Bern Associates Inc. v. Dallas Semiconductor Corp., 69 F.Supp.2d 240 (D. Mass. 1999) (rejecting majority view and holding that a deposition is not an 'other paper' under section 1446(b)); Harrell v. Reynolds Metals Co., 599 F.Supp. 966 (N.D. Ala. 1985) (same)."

Returning to the main text, Pallmeyer continued:

"As a general rule, Local Rule 81.2(a) indicates that where a complaint does not specify ad damnum, the defendant is not on notice that the $75,000 jurisdictional minimum amount in controversy is met, and cannot remove the case until it receives an admission that the plaintiff is seeking more than $75,000.
"Courts in this district have disagreed, however, about whether a defendant must remove a case within 30 days of receiving a complaint that does not specify ad damnum but from which the amount in controversy may reasonably be ascertained. Zeedyk v. Federal Express Corp., No. 03 C 9191, 2004 WL 417202, at *2 (N.D. Ill., March 1, 2004) (Gottschall, J.) (collecting cases).

"Recently, [the 7th U.S. Circuit Court of Appeals] has indicated in dicta that where a defendant ascertains that a case meets the $75,000 jurisdictional threshold, the plaintiff cannot prevent removal by refusing to concede that fact. Rubel v. Pfizer Inc., 361 F.3d 1016, 1020 (7th Cir. 2004).

"The court explained that, 'Because all local rules must be consistent with federal statutes, a rule blocking the defendants from making an independent estimate of the amount in controversy ... could not be enforced.' Thus, if a district court were to construe Local Rule 81.2(a) in a way that conditioned removal on plaintiff's acknowledgment that the amount in controversy exceeds $75,000, 'that would call its validity into serious question.'

"In McCoy," the Castillo case, "plaintiffs, adults and minors who were injured in an automobile accident, alleged that they suffered 'lasting and permanent injuries' and incurred bills related to 'medical, surgical, hospital, and nursing care for their injuries' as well as '[lost] wages and profits which they otherwise would have earned and acquired.'

"Plaintiffs also claimed that they suffered 'severe pain, emotional distress, disability, lost value and enjoyment of life, future loss of income, medical expenses, loss of normal life, disfigurement and paralysis.'

"Along with its answer, defendant requested an admission from plaintiffs that they were seeking damages in excess of $75,000; within 30 days of receiving such admission, defendant filed its notice of removal.

"Rejecting defendant's argument that its removal was timely because it complied with Local Rule 81.2(a), the court explained that the rule does not excuse a tardy removal where a plaintiff has alleged 'serious, permanent injuries and significant medical expenses,' as the rule does not 'provide a safe harbor that encourages defendants to wait for discovery responses that simply confirm what was obvious from the face of the complaint.'

"The intent of the 30-day time limit for removal, the court added, is 'to resolve the issue of removal as soon as possible and allow the case to proceed without fear of uprooting the proceedings and transplanting them elsewhere.'

"In Zeedyk, the court noted that, notwithstanding the McCoy decision, the majority of courts in this district 'have insisted on strict compliance with Local Rule 81.2 without exception for those cases whose removability might otherwise be determined from a reasonable and commonsense reading of the complaint.' The practical effect of this approach, the court noted, is to render all actions filed in Illinois state courts in which the complaint lacks an express ad damnum unremovable until proven otherwise.

"This court respectfully disagrees with this approach," Pallmeyer explained, "believing as did the McCoy court that notwithstanding Local Rule 81.2(a), a defendant who receives a pleading or paper from which the amount in controversy may reasonably be ascertained must remove the case within 30 days or not at all.
"Removal statutes are to be strictly construed, and numerous federal courts have concluded that any doubts regarding removability should be resolved against accepting removal jurisdiction. Resolving all doubts against removal, this court concludes that in circumstances where a defendant can easily ascertain that the amount in controversy exceeds $75,000, application of Local Rule 81.2(a) would contravene the purpose of the removal statute's 30-day timing requirement.

"The complaint in this case states that plaintiff 'suffered severe and permanent injuries, and was forced to, and will continue to seek extensive medical treatment in an attempt to be healed and cured of his maladies.'

"Clay testified that while he was helping to hoist plaintiff from the barge following his injury, he could see that plaintiff's leg was 'deformed.'

"In the court's view, defendants could have ascertained, both from the face of the complaint and from Clay's own knowledge of plaintiff's injury, that plaintiff would incur at least $75,000 in medical bills from such 'severe and permanent injuries' to his leg.

"If defendants entertained genuine doubts concerning the amount in controversy, their doubts should have been dispelled when they received plaintiff's answers to interrogatories on Aug. 13, 2003. Those answers revealed that plaintiff had already incurred more than $58,000 in medical bills; that he had been unemployed since the incident and claimed wage losses; and, most significantly, that his left leg had been amputated. Yet they made no effort to remove the case even then, instead choosing to wait until plaintiff gave his deposition several months later.

"Plaintiff's motion for remand is granted."

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