Today's opinion is a short one from the Seventh Circuit, but a very useful one for defendants nonetheless. Keeling v. Esurance Insurance Company was a class action filed against automobile insurer Esurance (created of the popular advertising icon Erin Esurance) that alleged that it sold a series worthless insurance policies in Illinois. Esurance removed to federal court, and a trial court in the Southern District of Illinois remanded, because the dispute did not meet the $5 million amount in controversy requirement. Since policies at issue had only collected 613,894 in premiums, the trial court reasoned it was "legally impossible" to meet the amount in controversy requirement.
Not so fast, said Judge Easterbrook. Once one took into account all of the relief the plaintiffs were asking for, $5 million was indeed a conceivable number. How did he get there?
First, Judge Easterbrook held that defendant may count the financial loss from complying with injunction as part of the amount in controversy.
The district court wrote that the cost to Esurance would be trivial: just reprint the forms. But this suit is about money, not ink. If the class is right and Esurance must either stop charging a premium or change the terms so that policyholders receive indemnity more frequently, it will suffer a financial loss.
(Emphasis added.) Judge Easterbrook counted the financial loss from complying as roughly $1.4 million; meaning restitution plus injunction put $2 million at issue.
That's still $3 million short of the amount-in-controversy requirement, however. But the plaintiffs had also requested punitive damages. And Judge Easterbrook noted that Illinois courts had held punitive multipliers of up to 7x to be legitimate (although the Supreme Court preferred a multiplier closer to 4x). So, counting just a 5x multiplier would add in the additional $3 million.
We therefore do not think it "legally impossible" for the class to recover more than $3 million in punitive damages. Improbable, perhaps, but not impossible.
The takeaway of this opinion should be pretty clear: as a removing defendant, think through all of the costs you may incur.