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Kaufman v. Costco Wholesale Corp.: US District Court : CIVIL PROCEDURE - amount in controversy for removal; inconsistency by plaintiff, counsel regarding damages

1
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Stuart Kaufman,
Plaintiff,
v. Civil No. 08-173 (JNE/SRN)
ORDER
Costco Wholesale Corporation,
Defendant,
Richard W. Hechter, Esq., Thill Law Firm P.A., appeared for Plaintiff Stuart Kaufman.
Andrew L. Marshall, Esq., Bassford Remele, A Professional Association, appeared for
Defendant Costco Wholesale Corporation.
Stuart Kaufman brought this action against Costco Wholesale Corporation (Costco) in the
Fourth Judicial District claiming damages for injuries allegedly resulting from a slip and fall in
Costcos St. Louis Park, Minnesota, store. Kaufman claimed that Costco was negligent in its
operation, maintenance, and inspection of its property and in its failure to warn Kaufman of a
dangerous condition existing on its property. After Costco removed the matter to this Court,
Kaufman filed a Motion to Remand, which the Court heard on July 11, 2008. The parties
submitted supplemental briefs addressing the applicability of Smith v. Eye Safety Systems, Inc.,
Civ. No. 06-1398, 2007 WL 128837 (D. Minn. Jan. 12, 2007), to Kaufmans Motion to Remand.
For the reasons set forth below, the Court denies the motion.
I. BACKGROUND
On December 14, 2007, Kaufman sued Costco in Minnesotas Fourth Judicial District
claiming damages for severe and painful injuries resulting from a slip and fall in Costcos St.
Louis Park, Minnesota, store. Kaufman sought damages in excess of ,000 for past and
2
future medical expenses and lost wages. Kaufmans Prayer for Relief complied with Minnesota
Rule of Civil Procedure 8.011, which provides [i]f a recovery of money for unliquidated
damages in an amount greater than ,000 is demanded, the pleading shall state merely that
recovery of reasonable damages in an amount greater than ,000 is sought.
Costco, a Delaware corporation having a principal place of business in Washington,
removed the action to this Court on January 17, 2008. Costco alleged that the amount in
controversy exceeded ,000 and that the parties were citizens of different states. Kaufman
moved to remand the action to state court claiming the amount in controversy did not exceed
,000. Kaufman did not contest Costcos description of the citizenship of the parties.
Kaufman claims he injured his neck, back, and hip as a result of his August 27, 2007, fall
in the Costco store. Kaufmans medical records indicate that he previously injured his left hip in
a car accident in January 2006 and that his pain allegedly increased after his fall. In November
2006, Kaufman sought treatment for his left hip and was diagnosed as suffering from a fracture
1 In 1978, the Minnesota Legislature enacted Minn. Stat. 544.36, which limits ad
damnum clauses as follows:
In a pleading in a civil action which sets forth an unliquidated claim for
relief, whether an original claim, cross-claim, or third-party claim, if a recovery of
money is demanded in an amount less than ,000, the amount shall be stated. If
a recovery of money in an amount greater than ,000 is demanded, the pleading
shall state merely that recovery of reasonable damages in an amount greater than
,000 is sought.
This section may be superseded by an amendment to the Rules of Civil
Procedure adopted after July 31, 1978.
Act of April 5, 1978, ch. 738, 3, 1978 Minn. Laws 838. The purpose of this section was to
limit the adverse impact that pleading large sums of damages could have on the public
perception of the civil justice system. See Mike Steenson, The Character of the Minnesota Tort
System, 33 Wm. Mitchell L. Rev. 239, 276-77 (2006). Minnesota Rule of Civil Procedure 8.01
was amended in 1985 to bring its language into conformity with this section. Minn. R. Civ. P.
8.01 advisory committees note (1985).
3
of the acetabulum, moderate degenerative joint disease, and tearing of the acetabular labrum.2 A
July 26, 2007, letter, signed by an examining physician, states that Kaufmans MRI results were
consistent with some moderate osteoarthritic changes and some labral tearing and that
Kaufman certainly may need to have total hip arthroplasty someday with continued progression
of his osteoarthritis. The letter also states that Kaufmans osteoarthritis was likely a preexisting
condition aggravated by the injuries sustained during the car accident and Kaufmans
fall at the Costco store. Kaufman was 53 years old at the time of his fall.
II. DISCUSSION
A defendant may remove a civil action brought in state court to the appropriate federal
district court if the United States District Courts have original jurisdiction of the action. 28
U.S.C. 1441(a) (2000). Original jurisdiction exists in the district courts in all civil actions
between citizens of different states where the amount in controversy exceeds the sum of ,000.
Id. 1332(a). After removal, a plaintiff may move to remand to state court on the basis of any
defect in the removal procedure or if the district court lacks subject matter jurisdiction. Id.
1447(c). The courts removal jurisdiction must be strictly construed and all doubts resolved in
favor of remand. Dahl v. R.J. Reynolds Tobacco Co., 478 F.3d 965, 968 (8th Cir. 2007).
The party asserting federal jurisdiction has the burden of showing that the amount in
controversy requirement is met. Hatridge v. Aetna Cas. & Sur. Co., 415 F.2d 809, 814 (8th Cir.
1969). Where the complaint states a specific amount that is lower than the required jurisdictional
amount, a defendant seeking removal must show that it appears to a legal certainty that the
amount in controversy exceeds the jurisdictional minimum. Dyrda v. Wal-Mart Stores, Inc., 41
F. Supp. 2d 943, 946 (D. Minn. 1999). The legal certainty test does not apply where a plaintiff
2 The acetabulum is the cup-shaped socket of the hip joint that receives the head of the
thighbone. The acetabular labrum is a ring of fibrous cartilage that runs around the acetabulum.
4
does not allege a specific amount in the complaint. Id. Instead, the removing party bears the
burden of proving, by a preponderance of the evidence, that the amount in controversy in fact
exceeds ,000. In re Minn. Mut. Life Ins. Co. Sales Practices Litig., 346 F.3d 830, 834 (8th
Cir. 2003). The burden can be met by submitting proof that the plaintiffs verdict reasonably
may well exceed the jurisdictional minimum, or if, on the face of the complaint, it is apparent
that the claims are likely above that amount. McNeilus Truck and Mfg., Inc. v. Hunt, Civ. No.
01-1099, 2001 WL 837940, at *2 (D. Minn. July 23, 2001) (citing Gilmer v. Walt Disney Co.,
915 F. Supp. 1001, 1007 (W.D. Ark. 1996)). The jurisdictional inquiry focuses on the claims
made at the time of removal. James Neff Kramper Family Farm Pship v. IBP, Inc., 393 F.3d
828, 833-34 (8th Cir. 2005).
Costco argues that the allegations in Kaufmans complaint support its claim that the
amount in controversy exceeds ,000. Kaufman pleaded damages in excess of ,000. He
alleged that his injuries were severe and painful and that some of his injuries are permanent.
He sought compensation for past and future medical expenses and lost wages. In addition,
Costco offers Kaufmans medical records, which indicate that he has suffered a fracture of the
acetabulum, tearing of the acetabular labrum, and may eventually require hip replacement.
Costco also offers evidence of cases involving similar injuries having settlement amounts and
jury verdicts in excess of the jurisdictional requirement.
Kaufman argues that the jurisdictional minimum is not met because he made a formal
settlement offer of ,000. A settlement offer, however, is not dispositive of the amount in
controversy. See Corlew v. Dennys Rest., Inc, 983 F. Supp 878, 879 (E.D. Mo. 1997).
Kaufman also suggests that the amount in controversy requirement is not met because he had a
pre-existing hip condition at the time of his fall. Because Kaufman testified at his deposition that
5
he was not aware of any problems with his left hip before his fall, the extent to which Kaufmans
pre-existing hip condition would reduce his damages is unclear. Further, Kaufman claims injury
to his neck and back as well as to his hip. Regardless of Kaufmans pre-existing hip condition,
Costco has shown that Kaufmans damages reasonably may well exceed ,000 based on
Kaufmans claimed injuries, his medical records diagnosing a fractured hip and indicating
possible future hip replacement, and his damages claim in excess of ,000.
In support of his argument that the amount in controversy does not exceed the
jurisdictional minimum, Kaufman testified at the hearing that his damages would not exceed
,000. A subsequent change, such as the plaintiff's post-removal voluntary reduction of his
claim to less than the jurisdictional amount, does not defeat federal jurisdiction acquired through
removal. Hatridge, 415 F.2d at 814. Post-removal stipulations that the damages do not exceed
the jurisdictional minimum have been used, however, to clarify the amount in controversy in
cases where the complaint filed in Minnesota state court sought recovery for damages in excess
of ,000 in accordance with Minnesota Rule of Civil Procedure 8.01. See, e.g., Eye Safety,
2007 WL 128837, at *1-2; Dyrda, 41 F. Supp. 2d at 945-46. When this Rule was enacted in
1985, the federal jurisdictional requirement was ,000. 28 U.S.C. 1332 (1982) (current
version at 28 U.S.C. 1332 (2000)). Congress increased the requirement to ,000 in 1988,
Judicial Improvements and Access to Justice Act, Pub. L. No. 100-702, Title II, 201, 102 Stat.
4642, 4646 (1988), and again increased the requirement to ,000 in 1997, Federal Courts
Improvement Act of 1996, Pub. L. No. 104-317, Title II, 205, 110 Stat. 3847, 3850 (1996).
6
The ambiguities in Dyrda and Eye Safety as to the amount in controversy arose because the
Minnesota pleading limitation has not kept pace with the federal jurisdictional minimum.3
In Dyrda, the plaintiff sued Wal-Mart Stores, Inc. (Wal-Mart), in Minnesota state court
for damages in excess of ,000 resulting from personal injuries suffered when the plaintiff
slipped and fell on an icy surface of a Wal-Mart store in Forest Lake, Minnesota. 41 F. Supp. 2d
at 945. After Wal-Marts removal of the action to federal court, the plaintiff moved to remand to
state court claiming that the amount in controversy did not exceed ,000. Id. at 946. In
opposition to remand, Wal-Mart offered evidence of verdicts and settlements in cases involving
similar injuries where damages exceeded ,000. Id. At the hearing on the motion for remand,
the plaintiff stipulated to damages of less than ,000. Id.
The magistrate judge found Hatridge was not controlling in Dyrda and recommended
remand. Dyrda, 41 F. Supp. 2d at 948-49. One distinguishing factor identified by the magistrate
judge was that Hatridge predated enactment of the Minnesota pleading law requiring plaintiffs
seeking unliquidated damages greater than ,000 to plead damages in excess of ,000
(rather than a specific amount). Id. at 948. Another reason Hatridge did not control was that the
Hatridge court concluded the plaintiff was forum shopping based on her attempt to claim less
than the jurisdictional amount by severing her claims. Dyrda, 41 F. Supp. 2d at 948-49. In
contrast, there was no obvious attempt to forum shop by the plaintiff in Dyrda. Id. Rather
than reducing the amount in controversy, the plaintiffs post-petition affidavit was relevant to
clear up the ambiguity in the amount of damages that were alleged at the time of removal. Id. at
3 Some states have adopted pleading requirements that prevent this ambiguity by requiring
the prayer for relief to state whether the alleged damages exceed the federal jurisdictional
minimum. See, e.g., Ark. R. Civ. P. 8(a) (2008); La. Code Civ. Proc. art. 893(A) (2008).
7
949. The district court judge adopted the Report and Recommendation of the magistrate judge.
Id. at 946.
In Eye Safety, plaintiffs Jason and Carrie Smith sued in Minnesota state court for
damages in excess of ,000 resulting from permanent injury to Jason Smiths left eye. 2007
WL 128837, at *1. The defendant removed the case to federal court, where plaintiffs moved to
remand and averred that neither sought more than ,000 in damages. Id. The defendant
offered evidence of similar cases having settlement amounts and jury verdicts greater than
,000. Id. at *2. The court found Dyrda on point and granted the motion to remand. Id.
This action, however, presents a different set of circumstances than those found in Dyrda
and Eye Safety. Dyrda relied on the clarifying nature of the plaintiffs affidavit when
determining remand was appropriate.4 41 F. Supp. 2d at 946 (The magistrate judge points out
that the plaintiff does not seek to reduce the original amount sought or to change the
circumstances after the filing of the complaint but seeks only to clarify the amount of damages
beyond what he is allowed to claim by Minnesota Pleading Law.) Here, Kaufmans testimony
does not clarify the amount of damages alleged at the time of removal. Kaufman claimed lost
wages in his complaint, yet testified at the hearing that he has no wage loss claims. The assertion
of no lost wages was repeated in Kaufmans supplemental brief. Kaufmans counsel suggested
4 Although Eye Safety describes the holding in Dyrda more broadly, see 2007 WL 128837,
at *2, it is well-settled that a plaintiffs post-removal voluntary reduction of damages to less than
the jurisdictional amount does not defeat federal jurisdiction acquired through removal, see
Powerex Corp. v. Reliant Energy Servs., Inc., __ U.S. __, ___, 127 S. Ct. 2411, 2417 n.1 (2007);
Wis. Dept. of Corr. v. Schacht, 524 U.S. 381, 391 (1998); St. Paul Mercury Indem. Co. v. Red
Cab Co., 303 U.S. 283, 292-93 (1938); Hatridge, 415 F.2d at 814. (The Court is aware that one
district court has interpreted Powerex as effectively abrogat[ing] the proposition that a postremoval
stipulation reducing the amount in controversy does not require remand. Roberts v.
A&S Bldg. Sys., L.P., Civ. No. 07-413, 2008 WL 220627, at *2-3 (E.D. Tenn. Jan. 25, 2008).
The Court finds the reasoning in A&S Building unpersuasive and believes that Bankhead v.
American Suzuki Motor Corp., 529 F. Supp. 2d 1329, 1334-35 (M.D. Ala. 2008), sets forth the
better view.)
8
at the hearing that Kaufmans pre-existing hip degeneration meant the amount in controversy
was less than ,000, but Kaufman testified at his deposition two days earlier that he was not
aware of any symptoms in his hip before his fall. These inconsistencies indicate that Kaufmans
testimony was intended to reduce his damages below the jurisdictional minimum. Further,
Kaufmans counsels evident displeasure at proceeding in a federal court, demonstrated at the
hearing and in Kaufmans supplemental brief, suggests that the purpose of Kaufmans testimony
was not to clarify the amount in controversy, but to avoid federal court. Kaufmans postremoval
stipulation reducing the amount in controversy is insufficient to destroy federal
jurisdiction. See Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868, 872-73 (6th Cir. 2000), cert.
denied, 532 U.S. 953 (2001); Chase v. Shop N Save Warehouse Foods, Inc., 110 F.3d 424, 429-
30 (7th Cir. 1997); In re Shell Oil Co., 970 F.2d 355, 356 (7th Cir. 1992) (per curiam).
Because Kaufmans post-removal testimony reduces his damages in an attempt to
circumvent federal jurisdiction, Dyrda and Eye Safety are inapplicable. Kaufmans post-removal
voluntary reduction of damages does not defeat federal jurisdiction. See Hatridge, 415 F.2d at
814. The important issue of whether a federal court has jurisdiction over a lawsuit on the basis
of the amount in controversy should be decided on the basis of substance, not gamesmanship.
McNeilus, 2001 WL 837940, at *2 n.1. Costco has shown by a preponderance of the evidence
that the amount in controversy at the time of removal reasonably may exceed ,000. The
motion to remand is denied.
9
III. CONCLUSION
Based on the files, records, and proceedings herein, and for the reasons stated above, IT
IS ORDERED THAT:
1. Plaintiffs Motion to Remand [Docket No. 12] is DENIED.
Dated: August 18, 2008
s/ Joan N. Ericksen
JOAN N. ERICKSEN
United States District Judge
 

 
 
 

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