Complaints filed in state court routinely allege only damages “in excess of $10,000.” If you’re a defendant considering removal to federal court based on diversity, such an allegation doesn’t meet the $75,000 amount in controversy threshold. But if you have information outside of the complaint – for example, based on settlement conversations or demands – that the plaintiff is in fact seeking more than $75,000 damages, when does the 30 day period for removal start?
According to a decision by the Western District of North Carolina, the plaintiff’s response to the defendant’s written statement of monetary relief sought starts the thirty-day clock. The defendant’s subjective knowledge of potential damages or the parties’ pre-litigation settlement discussions do not start the clock for removal.
Generally, notice of removal of a civil action must be filed within thirty days of the defendant’s receipt of the initial pleadings. When, however, it is not clear from the pleadings that the case is removable, a defendant has thirty days from receipt of “an amended pleading, motion, order, or other paper from which it may first be ascertained” that the case is removable.
In Hall v. Hillen, the plaintiff sought damages “in excess of $10,000” for injury, pain and suffering, and lost wages arising from a motor vehicle accident. During the early months of litigation, the defendant answered the complaint, served and responded to discovery, and communicated an offer of judgment. Four months after the complaint was filed, the defendant received a written response to its request for a statement of monetary relief sought, which indicated that the plaintiff sought damages in excess of $75,000. Nine days later, the defendant filed a notice of removal.
The Court found removal to be timely. In so holding, the Court noted several other potential events which did not start the clock on the thirty-day removal period. Neither the plaintiff’s subjective knowledge of the damages at issue nor a pre-litigation insurance demand were sufficient to render the amount-in-controversy “ascertainable” for purposes of the removal deadline. The Court also held that the defendant had not waived his right to remove the action by answering the complaint, making an offer of judgment, or engaging in discovery, as those “expected procedural steps” did not indicate a “clear and unequivocal intent to remain in state court.” The Court also indicated that if the defendant had filed a counterclaim, he would likely have waived his right to remove later.
The Hall decision indicates a narrow interpretation of what “other paper” may be considered to give notice of removability. The Court was unwilling to delve into what the defendant actually knew, and when he knew it, and instead limited its inquiry to the documents formally exchanged during the course of the lawsuit. Here the window for removal did not close until months after service of the complaint – in part because of the care taken by defendant to stake out plaintiff’s damages early in the case, and engaging in minimal discovery.