As Hamlet might have said if he had been a trial lawyer,
"To remove, or not to remove. That is the
question." And he might well have added, "And when
to remove? Aye, there's the rub." Recent
amendments to the federal removal statute and to the Texas Rules of
Civil Procedure have made the plot of that drama a little different
than it used to be.
For a number of years now, the Fifth Circuit has been creating and
refining a distinction between when a defendant may remove a
diversity case and when it must remove the case. A case
may be removed whenever the defendant is prepared to
allege in good faith in the notice of removal, and prove by a
preponderance of the evidence if necessary, that the amount in
controversy exceeds $75,000; the Fifth Circuit calls controversies
about this issue "amount disputes." On the other
hand, the thirty-day deadline by which a case must be
removed is triggered only by receipt of an original or amended
pleading or other paper that "affirmatively reveals on its
face" that the plaintiff is seeking damages in excess of
$75,000; cases involving this issue are called "timeliness
disputes."
Enter Congress, stage left. Effective for cases filed in
state court on or after January 6, 2012, the removal statute
contains explicit rules for determining the amount in
controversy. See 28 U.S.C.
§ 1446(c). The "sum demanded in good faith in
the initial pleading" is presumptively the amount in
controversy. In certain circumstances, however, the defendant
may allege and prove an amount in controversy. These are when
non-monetary relief is sought, when state practice does not permit
demand for a specific sum, and when state practice permits recovery
of damages in excess of the amount demanded. And if the case
stated by the initial pleading is not removable solely because of
the amount in controversy, information in the state court record or
in responses to discovery can trigger the thirty-day
deadline.
Enter the Supreme Court of Texas, stage right. Effective
March 1, 2013, Tex. R. Civ. P. 47 requires the plaintiff to state
the monetary amount in controversy, within certain
brackets. Cases in the brackets over $100,000 will be
immediately removable; cases in the $100,000-and-under bracket may
or may not be removable, under the federal statutory rules
described above. Note, however, that the Rule 47 brackets
appear to include interest and costs, whereas the federal
jurisdictional amount does not.
The last act of the play is not yet written. The statutory
changes make much of the existing removal jurisprudence obsolete,
and raise their own set of new questions. How and when is a
plaintiff's bad faith in specifying the amount in controversy
to be alleged and proven? Does Texas state practice, which
limits judgments to the pleadings but allows post-verdict
damage-increasing pleading amendments almost as a matter of right,
"permit recovery of damages in excess of the amount
demanded?" And does the post-initial-pleading record or
discovery information have to disclose the amount in controversy on
its face, or will a permissible inference from that information
suffice to start the thirty-day clock? Complicating the
situation, these questions and others will have to be answered in
an appellate environment in which only denials of remand can reach
the appellate courts.
Finally, the play has an epilogue, in the form of a slight
relaxation in the outside one-year limitation on diversity
removal. More about that in a future post.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
